New Economics Strategy
Cryptocurrency and economics
With many countries going into a recession I’d assume that an immediate bounceback for many of the global economies is unlikely. I’m here to inquire about the following theory, and hopefully discuss why it may or may not be viable.
The foundations of this theory would rely on two different types of cryptocurrency. First, the consumer to consumer cryptocurrency((cc) used for person to person/business transactions) and a government cryptocurrency ((gc) used for tariffs and taxes, or for government and corporate transactions).
Now to the best of my knowledge I’m going to lay down the groundwork of what is theorized to be a few prerequisites in order to understand this theory:
1. The government must have some control over the flow of money(the reason for gc)
2. There cannot be one global gc, thus every country would have its own
3. Taxes cannot be paid with cc without there being a high rate of exchange for doing so.
The current theory is this:
The wealth of the entire global market as a whole would account for the initial value of the cc. Current money can be exchanged for its value in cc. The value of gc’s will be determined by the amount of money that is currently controlled by the government, as well as any money owed(through bonds, social security, etc.). Since the government has control over the initial flow of the gc, it has the power to determine its value and account for tax rates. Tariffs are established so that the government can receive the gc’s of other countries. Correct me if I’m wrong, but since there are only a limited number of cryptocurrencies available at any given time, the behavior of the gc’s would be much like holding stock in a country(which could prove troublesome, or could give more power to the people). Whether or not it would be better to charge tariffs in gc or cc is something I do not know, but the amount of power that the government has is equivalent to the taxes that it receives from corporations, thus any products or services given to the government would basically be in the form of tax-write offs. Another possible option would be to only allow for the exchange of gc’s between countries, which are then paid in cc’s by the government. It might also be viable that the government owns assets that can be bought with gc in order for it to hold its value I.e. certain goods at grocery stores, or oil/gas, utilities, homes/properties, etc.
exchange between CC’s would be completely void of any government interaction, thus giving power to the people and acting as a global flow of currency. To remark what was said before, the exchange of goods between corporations can only be done through gc’s, but any consumer to business interactions can be done through cc’s.. this would keep the flow of currency within the borders as you cannot buy something without having it imported first.
With this theory in mind I could travel to any destination and use my cc’s for anything I would like to buy there, if I wanted to establish a business in a country, I’d have to pay taxes with the value of that country’s gc or the equivalent value of my country’s gc. This would enable each country to have power over the next, and that is what I’m afraid of, but it also may not be a bad thing/any different than our current situation (Im no economist).
What are your opinions about this economic strategy and what would be some of the pros/cons of establishing this new form of exchange?
With many countries going into a recession I’d assume that an immediate bounceback for many of the global economies is unlikely. I’m here to inquire about the following theory, and hopefully discuss why it may or may not be viable.
The foundations of this theory would rely on two different types of cryptocurrency. First, the consumer to consumer cryptocurrency((cc) used for person to person/business transactions) and a government cryptocurrency ((gc) used for tariffs and taxes, or for government and corporate transactions).
Now to the best of my knowledge I’m going to lay down the groundwork of what is theorized to be a few prerequisites in order to understand this theory:
1. The government must have some control over the flow of money(the reason for gc)
2. There cannot be one global gc, thus every country would have its own
3. Taxes cannot be paid with cc without there being a high rate of exchange for doing so.
The current theory is this:
The wealth of the entire global market as a whole would account for the initial value of the cc. Current money can be exchanged for its value in cc. The value of gc’s will be determined by the amount of money that is currently controlled by the government, as well as any money owed(through bonds, social security, etc.). Since the government has control over the initial flow of the gc, it has the power to determine its value and account for tax rates. Tariffs are established so that the government can receive the gc’s of other countries. Correct me if I’m wrong, but since there are only a limited number of cryptocurrencies available at any given time, the behavior of the gc’s would be much like holding stock in a country(which could prove troublesome, or could give more power to the people). Whether or not it would be better to charge tariffs in gc or cc is something I do not know, but the amount of power that the government has is equivalent to the taxes that it receives from corporations, thus any products or services given to the government would basically be in the form of tax-write offs. Another possible option would be to only allow for the exchange of gc’s between countries, which are then paid in cc’s by the government. It might also be viable that the government owns assets that can be bought with gc in order for it to hold its value I.e. certain goods at grocery stores, or oil/gas, utilities, homes/properties, etc.
exchange between CC’s would be completely void of any government interaction, thus giving power to the people and acting as a global flow of currency. To remark what was said before, the exchange of goods between corporations can only be done through gc’s, but any consumer to business interactions can be done through cc’s.. this would keep the flow of currency within the borders as you cannot buy something without having it imported first.
With this theory in mind I could travel to any destination and use my cc’s for anything I would like to buy there, if I wanted to establish a business in a country, I’d have to pay taxes with the value of that country’s gc or the equivalent value of my country’s gc. This would enable each country to have power over the next, and that is what I’m afraid of, but it also may not be a bad thing/any different than our current situation (Im no economist).
What are your opinions about this economic strategy and what would be some of the pros/cons of establishing this new form of exchange?
Comments (18)
It isn't the forms of currency that are at the root of our economic problems at this time.
Our problems are several: insufficient taxation to bear the cost of government (the rich are not paying enough); the political wing of most governments are in the pocket of the wealthiest class; insufficient investment in human capital (heath, education, environment, etc.), pointless production for profit rather than production for use (much of the consumer economy is based on sham needs), and so on.
In other words its the organization of the political economy that is the problem.
It seems incredibly complex and I cannot see what the practical value is supposed to be. Perhaps you could add a paragraph or two on just what you're trying to achieve, and how this system achieves it.
For example, I am entirely in the dark as to why you chose cryptocurrency over a normal currency.
Why not just eliminate the corporations? There's nothing that requires us to have corporations that have the rights of persons (as is the case in the USA). There's no physical law, like gravity or heat transfer, that says we have to have profit making corporations. If we wish to rid ourselves of them, we can (assuming we can muster the will to do so).
How does that work though? If you could just print a new currency to repay bonds, governments would have done so already. Where does the value of the new currency come from?
Quoting Justin Peterson
If it can't print money, then where is all the entirely new money coming from?
As far as cryptocurrency goes is it not, and please correct me if I'm wrong at any point, just a bunch of 1's and 0's? Could someone not hypothetically do something along the lines of '-regedit item "cryptocurrency" property "amount" value "9999999999999"' and disable the 'authcodecheck' property on the receiving end to 0. Suddenly, I'm a trillionaire. Give me your mansion. Lol.
So if not exchanged the value is held on the physical computer or some kind of online account?
What if the power grid is down for an unforeseeable time. Things start to go bad and some guy has a bunker and a mob of hungry rioters is seen in the distance. Two guys come up to you. One waving a computer harddrive in your face saying this is worth a million dollars in said currency, and happens to be telling the truth, saying he will give you 90% of it to take him in. And another guy who has a half-eaten cheeseburger and a few packets of croutons, who also knows how to fish, and says he'll split half of it with you to do the same. You only have room for one. Who do you take in?
Right on, BC.
If not all of them (I think definitely not all of them)...certainly most of them...and for sure the ones that deal primarily with NEEDS rather than WANTS. (With an expansive definition of NEEDS.)
And I would suggest expanding your idea to profit making in general, rather than just "corporations."
We should start immediately with Healthcare. Every profit motive for healthcare insurance should be ended tomorrow. No insurance companies, salespeople, commercial pitches for healthcare insurance should be allowed to endure...PERIOD.
We can move on from there.
Yep!
Right, so if the state owes me 1000 bucks, I get, say 100gc immediately. So the state prints money to immediately pay off all debt, but that will just result in massive inflation, no?
Quoting Justin Peterson
No loans mean a lot less flexibility though.
Quoting Justin Peterson
It's entirely unrealistic that the world gets together and actually agrees to this. So is this more than utopian fantasy?
“Right, so if the state owes me 1000 bucks, I get, say 100gc immediately. So the state prints money to immediately pay off all debt, but that will just result in massive inflation, no?”
Well it would cause no more inflation than if everyone now just withdrew their government bonds. Some mathematicians a lot smarter than me would be able to figure it out but think of it this way, if I make 100k a year, and I usually pay this much in taxes, and it would usually take me X amount of time to pay off those taxes with the money currently owed to me, then I get this many gc’s for the TOTAL amount of gc’s, but since there would be less in circulation at that time you could actually pay off a years worth of taxes for less than if all the gc’s were in circulation, does that make sense? It’s like if a company owns 95% of the stock and I own 5%, it’s going to be a lot more valuable than if the company owns 50% and other people own the other 50.
Also, the rate would be more like $1000 = 1250 gc.
“No loans mean a lot less flexibility though.”
And yes you are right, the government can’t pull money out of thin air anymore, but if I personally don’t go to the bank and pull out $100,000 to buy that new Ferrari I want I’m going to be a lot less flexible than if I did pull that money out. It’s no different for the government.
“ It's entirely unrealistic that the world gets together and actually agrees to this. So is this more than utopian fantasy?”
Utopian fantasy? Maybe, but if you look on the news many economies are going to absolute shite right now, UK just admitted it, the US knows it, and I’m sure a lot of other countries are going to follow suit. And actually no I think countries would love the idea, take China for example.. their currency is so inflated that the value of one yen is close to absolutely nothing. If you were to tell them that they could have a currency that holds just as much weight as the American dollar, they’d probably be all for it. Not to mention the American dollar is already almost the staple of the global economic system anyway, if we started using it as a means of exchange they’d almost have no option but to accept, not to mention the value of the currency would be a lot more viable. It’s like paying someone back with a house instead of an IOU, the currencies actually exist, but in the system we are in now, promising to pay back a loan with money we can create out of thin air is like saying “You give me this money that is worth something now, and I promise to pay it back later but I can’t promise that it’ll be worth anything when I do.” Even the security of cryptocurrency alone would be enough for governments to consider it.
Everyone withdrawing their government bonds would cause total chaos and very serious economic damage. So your statement that it "wouldn't be worse" is not reassuring.
Quoting Justin Peterson
No, it doesn't. I can't make out what you're trying to say.
Quoting Justin Peterson
That's an asinine example. The government doesn't buy Ferraris.
Quoting Justin Peterson
You've got this entirely backwards. The chinese Yen is artificially weakened relative to the dollar, because China relies on exports, and a strong Yen would hurt exports. For a country with a weaker economic productivity per capita, a stronger currency is often a disadvantage.
Quoting Justin Peterson
The American dollar is already the main currency for international exchanges. Almost everyone already accepts it as a means of exchange.
Quoting Justin Peterson
That's not really how loans work. When you give out a loan, that's when you create money out of thin air. And then you have to work to create the goods to actually back that loan. When banks give out loans, they don't actually give you some of their money. Only a small fraction of the loan is backed by money the bank actually has, and even that money stays in the bank.
Well I guess then the limitations on when people can withdraw would still be enacted.
Quoting Echarmion
So this would solely be based on income tax. If I make 100k per year, lets say I pay 25k in taxes. Lets say that I have 25k in government bonds. It's basically like saying okay, I'll give you enough gc to pay off your taxes for one year, plus the amount of time that accounts for the accrued interest. Contradictory to what I was saying before, it might be better if.. while the TOTAL amount of gc exists at the start, the only amount of gc circulating would be equal to the amount of american $$ that is in circulation, thus 1 gc = 1 USD.
Quoting Echarmion
Don't they? Have you seen how much the government spends on military funding, congress paychecks(they get paid their whole lifetime if I'm not mistaken), etc. (emphasis on the military spending). The point I'm trying to make is while we are enjoying these luxuries now, it will not be sustainable in the future. There is no telling where all the government money is going now, but I can almost guarantee that many of the budget cuts are not being applied to where they are absolutely necessary. Refer to Warren Buffet's 7 laws to reverse the deficit:
"I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election."
Quoting Echarmion
Hmm interesting I didn't know that, I'll refer then to Venezuela, Sudan, Iran, Liberia, etc. whose inflation rates are sky-high. Correct me if I'm wrong, and if you could elaborate on your statement so I can better understand it, I'd appreciate that.... But with high inflation rates, say of 50%, then the value of any previously owned money goes down 50%.
Quoting Echarmion
Exactly, so transitioning between the American dollar and the American's gc would be almost effortless, so long as there was a process with which the American dollar can ge exchanged for the gc in a way that would hold its value(in conjunction with what I said before about 1USD = 1 gc).
Quoting Echarmion
Exactly, I don't understand your argument. Could you elaborate a little bit please? What I'm referring to when something is created out of thin air is when banks create promissory notes to the government to promise to pay back a loan with money that doesn't exist. That is the essence of why I believe that our current system doesn't work. That money that doesn't exist is put into circulation and causes inflation which is what caused the 2008 recession. That is why this system would be hard to integrate, because the banks run the economy and this system would rid the need of banks. The structure of loans then would be incompatible and that would cause issues, but in my opinion, transferring to this system of exchange is as close to the integration between the Gold Standard and trading with commodities as we can get. However, the loans that I was referring to were with government bonds, in which the government is in debt because of its inability to pay back those bonds, so it creates fake money to do so, or am I wrong here?