7 ms·

I strongly believe that money itself has been corrupted lately, this then causes all number of bad flow on effects to happen. A massive shift happened when cent

by JanisL 5y ago

I strongly believe that money itself has been corrupted lately, this then causes all number of bad flow on effects to happen. A massive shift happened when central banks started getting involved in direct purchases of various asset types and we started to see a major distortion happen in monetary policy that which has distorted the functioning of money itself. For example who would care if their business is completely unprofitable if it could get access to freshly printed money every quarter to prop it up. What then happens to all the other businesses who don't get access to that freshly created money? When we have situations like the BoJ owning more than 60% of the Nikkei 225 we really ought to be asking some serious questions about if we really have free markets? We also should be asking some questions about the properties we desire in money itself. If a central monetary agency can go about unconventional monetary policy such as purchasing equities we can quickly have a situation whereby an unelected group of bureaucrats can damages the ability of money to be used as a means to convey information. Further there's questions about picking winners and losers that comes up there too. As a whole I think people need to ask what money is again and have some serious conversations about what money and the monetary system should be. It seems that these difficult questions really fell out of favor a while ago and as a result things have been drifting in a direction that many people aren't comfortable with. If we don't ask these questions then technological approaches to money, like various cryptocurrencies and other financial technologies are unlikely to actually cause long lasting improvements. We have some serious monetary policy problems in the world right now and while some tech could help (in some cases) these aren't primarily technological problems.

preseinger 5y ago
> As a whole I think people need to ask what money is again and have some serious conversations about what money and the monetary system should be. Money is not some concrete thing that has some inherent value. It's never been that. It's always been a promise, an abstract thing backed by collective trust. Fractional reserve banking was not a coup d'etat of an elite few performed to disenfranchise the 99% in order to ballast the 1%. It was a considered decision by rational actors and was necessary to enable economic growth since its introduction. In many ways it's wonderful that the current generation is questioning the old ways of doing things. This is how progress is made. I'm down. But money, government, everything which is the product of historical trial-and-error is a Chesterson's Fence: you really do need to understand why it's there before you try to rip it out and replace it with something else. And it's just so clear to me that basically nobody trying to replace fiat currency with crypto or whatever actually understands why fiat came to be.
onlyrealcuzzo 5y ago
Debt is >50% of advanced economies, and it's price fixed. Why bother with setting the price of bananas and everything else, when you can set one price and have a greater effect?
- JanisL 5y ago
  It would seem that the temptation to set the price of everything is increased when there are impediments to setting the interest rate (since this removes an important monetary policy lever). I think this has been seen lately as the zero-lower-bound on nominal interest rates has started to come into play in many places.
  - CRConrad 5y ago
    > the price of everything Heh, looks familiar. Usually goes between "Some people know..." and "...but the value of nothing".
sam0x17 5y ago
You're merely documenting how current regulations are inefficient at catching current abuses. With proper regulations, these kind of abuses could be mostly prevented. With anti-regulation sentiment permeating government and politics right now, this becomes much, much more difficult. People will use the failure of antiquated regulations that need to be updated as justification for removing or kneecapping them, because "clearly they don't work anyway". All systems trend towards chaos eventually. The answer is always more or better regulation. Sometimes better means more, sometimes better means "take these 50 regulations, get rid of them, and replace them with one simple one that gives you better outcomes". We don't want a rulebook so large no one could ever read all of it (we already have that). We don't want the complexity of the regulations to spiral out of control along with the system -- regulations need to be adapted over time to handle the current (and near future) complexity of the system. And we don't want no regulations -- then the system itself will spiral out of control. The whole idea of legal precedents works against this too -- the logic is inverted --- instead of constantly coming up with new takes and new rules to govern old and current situations, we hark back to a decision someone made 50 years ago and we say "this is set in stone", when we should be constantly updating and modifying those precedents to better fit the current state of the system. Eventually new laws get passed, but the judicial system itself is largely a damper on progress in this regard, dragging us into the past and making changes that could take 5 years take 50 years. We see this reflected in our astounding incarceration rate, and a number of other areas. The pace of technological and societal evolution has grown to be much faster than the pace at which we upgrade our regulations. We are speeding towards a brick wall.
- BeFlatXIII 5y ago
  It’s always refreshing to see a fellow skeptic of legal precedent in the wild. The precedent set by making the just ruling in one specific case may set up far greater injustices in the future.
- JanisL 5y ago
  I'm trying to encourage a discussion about what money itself should be. I think without this discussion it will be very hard to make effective regulations around money and the implications this has on the operations of the banking system. Once people are more informed about these topics better regulation will be possible. Frankly I don't see people talk about the fundamentals of money much, the current monetary system is convenient enough for most people such that they don't have to think about the details of how it works in their day to day lives.
zapataband1 5y ago
Exactly. I watched read about 2009 watched the Big Short and watched all these USELESS tech companies thrive on empty promises and venture caps where rich people are basically playing the lottery. The financial system captured our society a while ago.
mempko 5y ago
> As a whole I think people need to ask what money is again and have some serious conversations about what money and the monetary system should be. Yes! This is an incredibly important conversation and this conversation is already happening. You see MMT becoming mainstream. Because MMT is a description of how money works today. That it's a technology (and always has been) for governments to provision themselves. In fact, I doubt you would have had the stimulus package we had with COVID without that conversation. And it helped millions of people. It also had the unfortunate side affect of growing inequality. We also have the euro, which is, in my opinion a bad implementation of money (central bank without democratic oversight). And of course bitcoin based on the idea of hard currency economics. One discussion I don't see at the moment is a vision for society without money. That's a discussion the communists had over 150 years ago. It's a serious question because money IS a technology. Is the telephone the best communication technology? No, we moved on from the telephone. We should be asking the same thing about money. Because money is a technology designed around organizing economic activity. But is it the best technology? Example, the value that money represents is a single value. But why is it a scalar and not a vector? For example, why isn't everything priced with a value and a carbon cost? That would make prices vectors instead of scalars. In fact people value things across many dimensions and have to come up with a price, a single value. Imagine playing a video game where, instead of 3d vectors, everything is represented as the length of the vector. That's a lot of information that is just thrown away. In fact, markets have a known flaw called externalities. This flaw is created partly from the fact that value is a scalar. This flaw is so severe that major pollution has been created by economic activity (global warming, ozone, etc) that risks all life on this planet. People need to have imagination if we are going to survive as a species.
- carapace 5y ago
  > a vision for society without money. There are glints, Rainbow Gatherings, for example, are small transitory communities that function entirely without money. There are "intentional communities" that operate (in various ways) without money (althoug usually not without some formal accounting?) And things like Ithaca Hours, a "local currency".
- lmm 5y ago
  > Example, the value that money represents is a single value. But why is it a scalar and not a vector? For example, why isn't everything priced with a value and a carbon cost? That would make prices vectors instead of scalars. In fact people value things across many dimensions and have to come up with a price, a single value. Imagine playing a video game where, instead of 3d vectors, everything is represented as the length of the vector. That's a lot of information that is just thrown away. The whole value of monetary prices is that they're fungible - rather than having to compare the value of things in x different dimensions, you reduce everything to that scalar concept of value. > In fact, markets have a known flaw called externalities. This flaw is created partly from the fact that value is a scalar. This flaw is so severe that major pollution has been created by economic activity (global warming, ozone, etc) that risks all life on this planet. On the contrary, having value be a scalar is the solution, because it allows us to make tradeoffs between value and pollution. Cap and trade works (it worked for acid rain); the missing part is the will to actually do it. All that said, you might be interested in China's "social credit" system - that's the main example I know of this concept of "vector value", because it exists to impose a standard of behaviour on individuals that's not tradeable and fungible.
2nd_principles 5y ago
I really don’t get why so many smart people come up with every possible theoretical solution and yet they fail to observe that Bitcoin was engineered to solve this exact problem
- CRConrad 5y ago
  > Bitcoin was engineered To actually have wasting energy as the base of a system must be the very definition of shitty engineering.
- JanisL 5y ago
  Bitcoin had design goals in mind to avoid certain downsides of centralized currencies. The cryptocurrency space however lives inside the broader economy and questions about what money is and the regulations around it don't go away just because a specific cryptocurrency thought about some of these aspects in it's design. Even if bitcoin were to solve everyone's problems as some maximalists would claim how do we even implement this? Considering much of the world doesn't have holdings in bitcoin what are we to do? Similarly what do we do about people who don't have the infrastructure to run full nodes? What about dealing with interference with using the cryptocurrency imposed by external actors? There's good reasons why people discuss these ideas, bitcoin, much like anything else is just part of the direction things can go in and it doesn't exist in isolation from the rest of the world.
  - 2nd_principles 5y ago
    Assuming bitcoin fixes this like the maximalists claim, the way forward is to continue educating people on bitcoin and more importantly what’s wrong with the current monetary system. Way too many people buy into the narrative of bitcoin being harmful for the environment and being an outdated technology (“Blockchain, not bitcoin!”). Much of the world doesn’t own bitcoin but as long as you have a mobile phone and an internet connection, there’s a way to buy some. The technology’s been working for 12 years now and it can scale just fine, no need to tamper with anything. People don’t need to run full nodes, it’s already decentralized enough. I have one running off a raspberry pi and a 1TB hard drive, but it’s just because I want to and not because I think the additional node is needed for the network. Bitcoin is resilient against external actors by design, maximum decentralization and security. Remember when China finally cracked down on all bitcoin mining in May? The hashrate has recovered by now and China lost almost all of its 50% foothold on global bitcoin mining. The rest of the world’s bitcoin miners thanks China for its contribution. It seems to me like Bitcoin is dismissed too easily by people who haven’t done enough unbiased research on it. For me, it’s not so much that Bitcoin is such an awesome invention and everyone should worship it like a cult. My question is what happens after fiat currencies collapse? Every single government backed currency has collapsed from hyperinflation in the past, and there’s still a good number of countries with hyper inflating currencies today. Historically, after chaos and war, some people’s debts are flushed away at the expense of everyone else and a new currency is issued by the affected jurisdiction. Do we just want to repeat that cycle when the USD collapses? I think that a free market currency that cannot be controlled by any organization (including governments) deserves more limelight.
GavinMcG 5y ago
I think the article would argue you're making the mistake it criticizes: you're ignoring the role of regulation. > If a central monetary agency can go about unconventional monetary policy such as purchasing equities... If that's a problem, prohibit it.
- JanisL 5y ago
  I'm not sure why you'd take from this that I'm ignoring the role of regulation when I'm commenting on a situation whereby the regulatory framework of central banks allows them to take actions that damage the signaling power of pricing. I most definitely think that banks and central banks must be carefully regulated because they have the special privilege of creating money and with this comes a lot of responsibility. The other part though is that if money is corrupted it impacts the process of regulation itself. For example creating good regulation to tax companies is made far more difficult when there's fundamental differences between the nature of the money that those companies themselves have access to. I'm sure it would be possible with a large amount of effort to have regulations with non-fungible money but there's challenges there that would be substantially difficult to address and the complexity of that regulation would come with it's own non-zero costs to society.
  - sam0x17 5y ago
    In simpler terms, for any complaint you come up with, here's a regulation to fix it. Problem solved. If the problem is a regulation, let's remove or modify that regulation. Problem solved. If your problem is there are too many regulations, let's get rid of 20 of them and simplify down to just this one. Problem solved. Oh, that simplification created its own problems? Let's create new regulations covering those three scenarios. Problem solved. But if we are much slower at creating regulations than we are at creating new situations that require regulation, it creates the perception that regulations don't work, which leads to rapid de-regulation of everything. Our current legal and political framework simply wasn't designed for this. It was designed for 13 small colonies writing paper letters back and forth, where waiting 3 months for a court to make a decision or 1+ years for congress to pass a bill was considered quite timely and fine. We now live in a society where there is probably a need for 2-3 new regulations per day, and 1-2 adjustments to existing regulations, per day, and an AI chat bot that will tell you whether something is legal based on current regulations.
JohnJamesRambo 5y ago
https://fred.stlouisfed.org/series/MABMM301USM189S https://fred.stlouisfed.org/series/MABMM301USM189S Yes, corrupted a tad. :)
whakim 5y ago
> A massive shift happened when central banks started getting involved in direct purchases of various asset types and we started to see a major distortion happen in monetary policy that which has distorted the functioning of money itself. Historically, Western democratic states owned a significant amount of assets as measured as a percent of national income - it was only in the period 1970-2008 that the value of total state-owned assets shrunk to near-zero (or even became negative in some cases). So the large increases in value of states' balance sheets (and corresponding impacts) is not at all unusual. That being said, you're correct to point out that Central Banks heading these trends is a little concerning, mostly because it basically represents democracy outsourcing these important decisions to unelected bureaucrats.
- JanisL 5y ago
  I think there's a massive difference between the government owning things and the central bank owning things for the reasons you mention about accountability.

by JanisL 5y ago

preseinger 5y ago

> As a whole I think people need to ask what money is again and have some serious conversations about what money and the monetary system should be. Money is not some concrete thing that has some inherent value. It's never been that. It's always been a promise, an abstract thing backed by collective trust. Fractional reserve banking was not a coup d'etat of an elite few performed to disenfranchise the 99% in order to ballast the 1%. It was a considered decision by rational actors and was necessary to enable economic growth since its introduction. In many ways it's wonderful that the current generation is questioning the old ways of doing things. This is how progress is made. I'm down. But money, government, everything which is the product of historical trial-and-error is a Chesterson's Fence: you really do need to understand why it's there before you try to rip it out and replace it with something else. And it's just so clear to me that basically nobody trying to replace fiat currency with crypto or whatever actually understands why fiat came to be.

onlyrealcuzzo 5y ago

Debt is >50% of advanced economies, and it's price fixed. Why bother with setting the price of bananas and everything else, when you can set one price and have a greater effect?

JanisL 5y ago
It would seem that the temptation to set the price of everything is increased when there are impediments to setting the interest rate (since this removes an important monetary policy lever). I think this has been seen lately as the zero-lower-bound on nominal interest rates has started to come into play in many places.
- CRConrad 5y ago
  > the price of everything Heh, looks familiar. Usually goes between "Some people know..." and "...but the value of nothing".

sam0x17 5y ago

You're merely documenting how current regulations are inefficient at catching current abuses. With proper regulations, these kind of abuses could be mostly prevented. With anti-regulation sentiment permeating government and politics right now, this becomes much, much more difficult. People will use the failure of antiquated regulations that need to be updated as justification for removing or kneecapping them, because "clearly they don't work anyway". All systems trend towards chaos eventually. The answer is always more or better regulation. Sometimes better means more, sometimes better means "take these 50 regulations, get rid of them, and replace them with one simple one that gives you better outcomes". We don't want a rulebook so large no one could ever read all of it (we already have that). We don't want the complexity of the regulations to spiral out of control along with the system -- regulations need to be adapted over time to handle the current (and near future) complexity of the system. And we don't want no regulations -- then the system itself will spiral out of control. The whole idea of legal precedents works against this too -- the logic is inverted --- instead of constantly coming up with new takes and new rules to govern old and current situations, we hark back to a decision someone made 50 years ago and we say "this is set in stone", when we should be constantly updating and modifying those precedents to better fit the current state of the system. Eventually new laws get passed, but the judicial system itself is largely a damper on progress in this regard, dragging us into the past and making changes that could take 5 years take 50 years. We see this reflected in our astounding incarceration rate, and a number of other areas. The pace of technological and societal evolution has grown to be much faster than the pace at which we upgrade our regulations. We are speeding towards a brick wall.

BeFlatXIII 5y ago
It’s always refreshing to see a fellow skeptic of legal precedent in the wild. The precedent set by making the just ruling in one specific case may set up far greater injustices in the future.
JanisL 5y ago
I'm trying to encourage a discussion about what money itself should be. I think without this discussion it will be very hard to make effective regulations around money and the implications this has on the operations of the banking system. Once people are more informed about these topics better regulation will be possible. Frankly I don't see people talk about the fundamentals of money much, the current monetary system is convenient enough for most people such that they don't have to think about the details of how it works in their day to day lives.

zapataband1 5y ago

Exactly. I watched read about 2009 watched the Big Short and watched all these USELESS tech companies thrive on empty promises and venture caps where rich people are basically playing the lottery. The financial system captured our society a while ago.

mempko 5y ago

> As a whole I think people need to ask what money is again and have some serious conversations about what money and the monetary system should be. Yes! This is an incredibly important conversation and this conversation is already happening. You see MMT becoming mainstream. Because MMT is a description of how money works today. That it's a technology (and always has been) for governments to provision themselves. In fact, I doubt you would have had the stimulus package we had with COVID without that conversation. And it helped millions of people. It also had the unfortunate side affect of growing inequality. We also have the euro, which is, in my opinion a bad implementation of money (central bank without democratic oversight). And of course bitcoin based on the idea of hard currency economics. One discussion I don't see at the moment is a vision for society without money. That's a discussion the communists had over 150 years ago. It's a serious question because money IS a technology. Is the telephone the best communication technology? No, we moved on from the telephone. We should be asking the same thing about money. Because money is a technology designed around organizing economic activity. But is it the best technology? Example, the value that money represents is a single value. But why is it a scalar and not a vector? For example, why isn't everything priced with a value and a carbon cost? That would make prices vectors instead of scalars. In fact people value things across many dimensions and have to come up with a price, a single value. Imagine playing a video game where, instead of 3d vectors, everything is represented as the length of the vector. That's a lot of information that is just thrown away. In fact, markets have a known flaw called externalities. This flaw is created partly from the fact that value is a scalar. This flaw is so severe that major pollution has been created by economic activity (global warming, ozone, etc) that risks all life on this planet. People need to have imagination if we are going to survive as a species.

carapace 5y ago
> a vision for society without money. There are glints, Rainbow Gatherings, for example, are small transitory communities that function entirely without money. There are "intentional communities" that operate (in various ways) without money (althoug usually not without some formal accounting?) And things like Ithaca Hours, a "local currency".
lmm 5y ago
> Example, the value that money represents is a single value. But why is it a scalar and not a vector? For example, why isn't everything priced with a value and a carbon cost? That would make prices vectors instead of scalars. In fact people value things across many dimensions and have to come up with a price, a single value. Imagine playing a video game where, instead of 3d vectors, everything is represented as the length of the vector. That's a lot of information that is just thrown away. The whole value of monetary prices is that they're fungible - rather than having to compare the value of things in x different dimensions, you reduce everything to that scalar concept of value. > In fact, markets have a known flaw called externalities. This flaw is created partly from the fact that value is a scalar. This flaw is so severe that major pollution has been created by economic activity (global warming, ozone, etc) that risks all life on this planet. On the contrary, having value be a scalar is the solution, because it allows us to make tradeoffs between value and pollution. Cap and trade works (it worked for acid rain); the missing part is the will to actually do it. All that said, you might be interested in China's "social credit" system - that's the main example I know of this concept of "vector value", because it exists to impose a standard of behaviour on individuals that's not tradeable and fungible.

2nd_principles 5y ago

I really don’t get why so many smart people come up with every possible theoretical solution and yet they fail to observe that Bitcoin was engineered to solve this exact problem

CRConrad 5y ago
> Bitcoin was engineered To actually have wasting energy as the base of a system must be the very definition of shitty engineering.
JanisL 5y ago
Bitcoin had design goals in mind to avoid certain downsides of centralized currencies. The cryptocurrency space however lives inside the broader economy and questions about what money is and the regulations around it don't go away just because a specific cryptocurrency thought about some of these aspects in it's design. Even if bitcoin were to solve everyone's problems as some maximalists would claim how do we even implement this? Considering much of the world doesn't have holdings in bitcoin what are we to do? Similarly what do we do about people who don't have the infrastructure to run full nodes? What about dealing with interference with using the cryptocurrency imposed by external actors? There's good reasons why people discuss these ideas, bitcoin, much like anything else is just part of the direction things can go in and it doesn't exist in isolation from the rest of the world.
- 2nd_principles 5y ago
  Assuming bitcoin fixes this like the maximalists claim, the way forward is to continue educating people on bitcoin and more importantly what’s wrong with the current monetary system. Way too many people buy into the narrative of bitcoin being harmful for the environment and being an outdated technology (“Blockchain, not bitcoin!”). Much of the world doesn’t own bitcoin but as long as you have a mobile phone and an internet connection, there’s a way to buy some. The technology’s been working for 12 years now and it can scale just fine, no need to tamper with anything. People don’t need to run full nodes, it’s already decentralized enough. I have one running off a raspberry pi and a 1TB hard drive, but it’s just because I want to and not because I think the additional node is needed for the network. Bitcoin is resilient against external actors by design, maximum decentralization and security. Remember when China finally cracked down on all bitcoin mining in May? The hashrate has recovered by now and China lost almost all of its 50% foothold on global bitcoin mining. The rest of the world’s bitcoin miners thanks China for its contribution. It seems to me like Bitcoin is dismissed too easily by people who haven’t done enough unbiased research on it. For me, it’s not so much that Bitcoin is such an awesome invention and everyone should worship it like a cult. My question is what happens after fiat currencies collapse? Every single government backed currency has collapsed from hyperinflation in the past, and there’s still a good number of countries with hyper inflating currencies today. Historically, after chaos and war, some people’s debts are flushed away at the expense of everyone else and a new currency is issued by the affected jurisdiction. Do we just want to repeat that cycle when the USD collapses? I think that a free market currency that cannot be controlled by any organization (including governments) deserves more limelight.

GavinMcG 5y ago

I think the article would argue you're making the mistake it criticizes: you're ignoring the role of regulation. > If a central monetary agency can go about unconventional monetary policy such as purchasing equities... If that's a problem, prohibit it.

JanisL 5y ago
I'm not sure why you'd take from this that I'm ignoring the role of regulation when I'm commenting on a situation whereby the regulatory framework of central banks allows them to take actions that damage the signaling power of pricing. I most definitely think that banks and central banks must be carefully regulated because they have the special privilege of creating money and with this comes a lot of responsibility. The other part though is that if money is corrupted it impacts the process of regulation itself. For example creating good regulation to tax companies is made far more difficult when there's fundamental differences between the nature of the money that those companies themselves have access to. I'm sure it would be possible with a large amount of effort to have regulations with non-fungible money but there's challenges there that would be substantially difficult to address and the complexity of that regulation would come with it's own non-zero costs to society.
- sam0x17 5y ago
  In simpler terms, for any complaint you come up with, here's a regulation to fix it. Problem solved. If the problem is a regulation, let's remove or modify that regulation. Problem solved. If your problem is there are too many regulations, let's get rid of 20 of them and simplify down to just this one. Problem solved. Oh, that simplification created its own problems? Let's create new regulations covering those three scenarios. Problem solved. But if we are much slower at creating regulations than we are at creating new situations that require regulation, it creates the perception that regulations don't work, which leads to rapid de-regulation of everything. Our current legal and political framework simply wasn't designed for this. It was designed for 13 small colonies writing paper letters back and forth, where waiting 3 months for a court to make a decision or 1+ years for congress to pass a bill was considered quite timely and fine. We now live in a society where there is probably a need for 2-3 new regulations per day, and 1-2 adjustments to existing regulations, per day, and an AI chat bot that will tell you whether something is legal based on current regulations.

JohnJamesRambo 5y ago

https://fred.stlouisfed.org/series/MABMM301USM189S https://fred.stlouisfed.org/series/MABMM301USM189S Yes, corrupted a tad. :)

whakim 5y ago

> A massive shift happened when central banks started getting involved in direct purchases of various asset types and we started to see a major distortion happen in monetary policy that which has distorted the functioning of money itself. Historically, Western democratic states owned a significant amount of assets as measured as a percent of national income - it was only in the period 1970-2008 that the value of total state-owned assets shrunk to near-zero (or even became negative in some cases). So the large increases in value of states' balance sheets (and corresponding impacts) is not at all unusual. That being said, you're correct to point out that Central Banks heading these trends is a little concerning, mostly because it basically represents democracy outsourcing these important decisions to unelected bureaucrats.

JanisL 5y ago
I think there's a massive difference between the government owning things and the central bank owning things for the reasons you mention about accountability.