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Proposals for monetary reform, whether mild or radical, are always and everywhere informed by bitcoin group newspapers underlying theory of money.
A week ago I spent two days talking with a group of technologists and bitcoin group newspapers I should say digital coders and legal coders—and pressed them on this point. Chatham House rules prevent me from associating views bitcoin group newspapers actual people, but the views themselves are the important thing.
So far as I understand, and it is important to emphasize that there was not consensus on the details, the technologists see bitcoin group newspapers as creating a form of money more trustworthy than that issued by sovereign states, more trustworthy because the rules of money creation bitcoin group newspapers proof-of-work or proof-of-stake or whatever limit issue to a fixed and finite quantity.
Scarcity of the tokens today, and confidence that scarcity will be maintained in years to come, are supposed to support the value of the tokens today. Importantly, no such confidence can be attached to state-issued money; bitcoin group newspapers the contrary states are seen as reliable abusers of money issue for their own purposes.
Cryptocurrency is digital gold while fiat currency is just paper, subject to overissue and hence depreciation. Bitcoin group newspapers everyone else realizes the superiority of cryptocurrency, they will all want to switch over, and the value of fiat currency will collapse. According to the theory, one of the cryptocurrencies will be the future global currency, replacing the dollar, but no one knows which one.
People who got into Facebook at the beginning are all multimillionaires; early adopters bitcoin group newspapers the future global cryptocurrency will be too, but which one will it be? One of the most fascinating things about bitcoin group newspapers technologist view of the world is their deep suspicion even fear of credit of any kind. Fiat money is untrustworthy enough, promises to pay fiat money are doubly untrustworthy. Simons was of course responding to the global credit collapse of the Great Depression; the cryptos are responding instead to the more recent global financial crisis.
I view all of this through the lens of the money view, which places banking at the center of attention, views banking as fundamentally a swap of IOUs, and views money as nothing more than the highest form of credit.
It is view developed not so much around a philosophical ideal but rather as a way of making sense of the operation of the world as it actually exists, outside the window as it were.
In that world, the payment system is essentially a credit system, in which offsetting promises to pay clear with only very minimal use of money. And prices arise from the activity of profit-seeking dealers who absorb fluctuations in demand and supply by standing ready to take any excess onto their own balance sheet, relying on credit markets to fund the resulting inventory fluctuations.
One can imagine automating a lot of that activity—and blockchain technology may well be useful for that task—but one cannot imagine eliminating the credit element. Credit is not a bug, but a feature. This point of view draws special attention to the place where markets are being made to convert one cryptocurrency into another, and especially the place where markets are being made to convert cryptocurrency into so-called fiat.
Cryptos fear credit, but I suspect they will soon discover that credit is a feature not a bug, and that will require them to re-examine the implicit monetary theory that underlies their coding.
To date, technologists bitcoin group newspapers to have felt that they have nothing to learn from the operation of the existing monetary and financial system, as their bitcoin group newspapers is intended to replace it with something better.
But from a money view standpoint, it is the institution of credit that is the real disruptor, which is fundamentally why it is feared, by cryptos and also by the rest of us.
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