The general price level of all other currencies is not relevant to MØ. It will almost always remain equal to 1 1410312858 UTC USD, worldwide.

Aren't those things part of the basket of thing of which the price level should be stable ?

At what point do you decide that an asset is a currency, and shouldn't be included ?

Is the gold price in the basket ?

Is the platinum price in the basket ?

Is the iridium price in the basket ?

Is the copper price in the basket ?

Is the mortar price in the basket ?

Are housing prices in the basket ?

I'm trying to wrap my mind around the idea that a given currency, in competition with others, can have any meaning on "stable prices".

Imagine that there are 3 of these currencies around: M0, N0, and P0. They are trying to achieve stable price levels, all three of them. But suppose now that on friday, half of the people holding M0, trade it for N0. This should imply that on saturday, the amount of M0 halves, right ? How do you do that ? You halve the contents of all accounts ? People possessing 50 M0 now only possess 25 M0 any more ? It would also imply that on saturday, N0 has to increase with the same amount (depending of how much N0 was running around). In fact, in as much as M0 and N0 both want to hold stable prices, the exchange rate between M0 and N0 should remain constant (let us say for simplicity, it should be 1).

How do you handle that ?

If you desperately want to buy N0 with M0, and I have N0, how can you have me NOT fix a price above 1 ?

Ideally, if you want to exchange M0 for N0, every M0 that is given should be destroyed, and every N0 so obtained, should be created. That is, N0 and M0 should be identical. But we made the hypothesis that they aren't.

Suppose that there is a period (like bitcoin has known) of decline of M0, that is, during a year, people flee M0 to buy N0. I can understand that on the N0 side, there is a consensus to create coins, to keep the price stable. But how are we going to destroy M0 ? Does it mean that people holding M0 are going to see their accounts diminish automatically ? That would induce them to flee M0 even more !

Consider, on the other hand, the holders of N0. They see all these former M0 holders come in. This implies that N0 are created at a massive rate. If they had been holding a supply-stable currency, then the increased demand for N0 would increase the value of their holdings, but by definition, with a price stable currency, the creation compensates that ideally. Why do the N0 holders remain with N0, and do not go into a supply-stable currency that has the potential to rise ?

So my main question is:

if, when you have different price-stable currencies, one of them declines in popularity, the holdings of the people still holding money in it, decline too in order for it not to diminish in price ?

Because that's annoying.

Imagine I had 100 M0 coins, worth 500 apples in total. Price level is 1 M0 coin = 5 apples ?

Suppose now that half of the people holding M0 coins want to switch to N0 coins on friday. The large offer of M0 coins to sell would make the price of M0 coins fall, and my 100 M0 coins wouldn't be worth 500 apples any more if nothing happens. With an M0 coin, you would only be able to buy 2.5 apples any more.

So what happens ? Do all M0 accounts get divided by 2 to get the price of an M0 back to 5 apples ?

Do I only hold 50 M0 coins any more ?

But that would imply that my total buying power of my account in reality HAS decreased ! I could buy 500 apples with my account content, and now I can only buy 250 apples. OK, each individual coin still has the value of 5 apples because of the monetary deflation, but I lost half of my savings !

So how does this work to keep the savings constant, if the market cap of M0 halves ?

If, from friday on saturday, people don't like M0 any more, and want N0, how do you keep the price level constant AND the savings constant of those people still holding M0 ?

Also, look onto it from the side of the N0 holders, before the M0 holders came for N0. Why would these people who were holding N0, agree to turn out a lot of N0, so that the value of their savings *doesn't* increase in the face of all these newcomers to N0 ?

If the N0 holders are free to determine the quantity of N0 printed, why would they do a favor to the newcomers, and not ask them a higher price for their precious N0 ?

Of course, that's something that is nicer, if there is mining with proof of stake, and if you can get new coins proportionally to your stake. You may indeed decide that if you were holding 100 N0 coins, that you have the right to create 50 more, which decreases the value of an individual N0 back to its stable price. If normally, due to higher demand for N0, there was potentially a price increase of 50% of an N0 coin (7.5 apples instead of 5 apples), allowing everybody owning 100 N0 coins to make 50 new N0 coins makes this fall back to 5 apples, but you now hold 150 coins.

The question is, of course, if those N0 holders go back to M0 on money, how you go down again from 150 N0 coins to 100 N0 coins....

You could wonder what would be the reason for massive moves between N0 and M0, if these coins are both "price stable". There can be different reasons. One would be the confidence that people have in these two coins. Others could be that big players want to get the coins slightly off equilibrium to make margin profits. They know that they don't risk any thing on the long run, as the long run exchange rate will always be 1, and they try to make a benefit on the lag on regulation, where the exchange rates differ from 1.

Yet another reason could be that there is an interesting buy in one of the coins with merchant, who only accepts, say, N0, and refuses M0. Or still other reasons.