Just saw the release of a report on stablecoins today. Days worth of reading of comments on Hacker News, top comment is about bank runs on stablecoins.
This may be a good opportunity to start a thread on money. Thoughts:
The quantified growth of the wealth of a nation (or some other group) is a measure their collective growth of knowledge. When one says the "GDP went up", that isn't strictly about what gets consumed, it's about what can be consumed. Which is to say, if the value of wealth grows, then the amount of things one can do with the same resources grows. Thus, while consumption and knowledge growth are correlated, growth is not strictly attached to resource consumption. For example, we always had the materials to make an iPhone, encode some valuable text (like this post) [digitally], make a plow, or whatever, but we didn't have the _means–_we didn't have the knowledge to do it. So as knowledge grows, so does wealth, and wealth is a better measurement of our collective repertoire than it's physical instantiation.
What does this say about creativity, the meme of the underdog or survivor (in business or otherwise), where progress comes from, and how new knowledge should be distributed? I think this is where the link to central banks and governance comes in. The goal of inflation is to make the measurement of this "wealth" stay stable in terms of purchasing power of the users of that instrument. Arguments about deflation, inflation rates, quantitative easing, austerity measures, helicopter money, interest rates, repo rates, treasury rates, bond rates, etc etc, represent discussion about how to us money to aide knowledge growth, through distribution control. Hence, all fiat is in principle, ideally, a stablecoin. Nation states are ruled by elected officials who face removal by their constituents who demand security, stability, and progress simultaneously. If the currency they have agreed to use doesn't protect their constituents from volatility during inevitable fluctuations of knowledge distribution, what is it doing? Stablecoin and fiat are synonymous. Where does Bitcoin fit into this?
Interestingly, The FED is independent of the US government. The US government has full power to lessen reliance on the FED. The FED is a tool that politicians, bureaucrats and other government officials use to solve problems for their constituents. There's a lot to say about perverse incentives here. I think those incentives to get more stable points (dollars) change with Bitcoin. Creating more problems, and solving others. But the most important thing it that Bitcoin returns the power of using some monetary tools to the individual. It makes inflation, and deflation, optional. Futher, this desire to control the use of stablecoins by individuals is anti-thetical to the some of the values America represents ideologically.
A quote I heard that really cuts to the core of the conversation:
"No inflation without representation"
To me Bitcoin is really at the heart of why America was founded in the first place and what "progress" means in "The West". It provides contemporary context for why the founding fathers argued so much about the treasury and central banking during the federalist era (I'm no expert on this, though I have only read bits and pieces of source material here and there). There's much more to talk about in regards to coming off of the gold standard, the move to the Petrodollar, the relationship between measuring value and energy, and how currencies work and are secured. But I feel like this is a good start, with lots to argue about.
Thoughts?