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Author Topic: Thought experiment: Resetting spendings each month; what would happen?  (Read 3724 times)
FooDSt4mP
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April 10, 2011, 03:33:06 PM
 #21

if the money were doubled and distributed equally, not proportionally

Ah, I messed that up, sorry.

Definitely nothing fair about equal distribution though.


Why not?  Is unequal distribution more fair?

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Alex Beckenham
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April 10, 2011, 03:45:08 PM
 #22

if the money were doubled and distributed equally, not proportionally

Ah, I messed that up, sorry.

Definitely nothing fair about equal distribution though.


Why not?  Is unequal distribution more fair?

Most definitely, yes.

When in your example Ben B distributed equally, he stole a little bit of Alice's and Bob's purchasing power (their money), to keep for himself.

If he had distributed unequally in a proportional manner, he wouldn't have taken anything from anyone.

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April 10, 2011, 03:46:49 PM
 #23

Good points... I was grasping at straws to push this thread a little further Smiley.  However, I think it might be a little more fair than what happens today if the only way to introduce new money was to split it among every citizen.

If that really were the case, then I absolutely can't see any reason to increase the money supply.

Let's say the entire population consists of:

Alice who has $10
Bob who has $10
Ben B. who has $5

Ben decides to double the money supply, distributing equally as you have suggested.

Alice now has $20
Bob now has $20
Ben B. now has $10

They all have exactly the same purchasing power as before, so the whole exercise was pointless.

The only reason I can see for Ben B. to increase the money supply is to increase his (or his friends') percentage of the total purchasing power (Which is basically a tax on Alice and Bob).

Why else would he do it?


This is one thing bitcoin can do by adding a fixed multiplier to each block such that at the end of the day the output value of each block 24 hours old is doubled. The client would do this when calculating the value of a block that is buried n blocks deep in the chain.

You have 10 bitcoin today -> tomorrow you can spend 20 bitcoin.

A recipe for hyperinflation for sure :-)
  
Alex Beckenham
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April 10, 2011, 03:51:30 PM
 #24

Here's an example, let's say:

A owns $100
B owns $1
C owns $1
D owns $1
E owns $1
F owns $1
G owns $1


So A is 100 times richer than everyone else through hard work or sheer luck, whatever... for argument's sake let's say that's his rightful position in society.

Now G decides to distribute some new money equally and gives $1000 to everyone.

A now owns $1100
B now owns $1001
C now owns $1001
D now owns $1001
E now owns $1001
F now owns $1001
G now owns $1001

How is that 'fair' to all but obliterate A's purchasing power and position in society that he worked so hard to achieve?


ffe
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April 10, 2011, 03:59:09 PM
 #25

This is one thing bitcoin can do by adding a fixed multiplier to each block such that at the end of the day the output value of each block 24 hours old is doubled. The client would do this when calculating the value of a block that is buried n blocks deep in the chain.

You have 10 bitcoin today -> tomorrow you can spend 20 bitcoin.

A recipe for hyperinflation for sure :-)

This is interesting because it's inflation due to an automatic process not human decisions (subject to greed).

Think of a goal to increase or decrease the available bitcoin based on trying to make the level of transaction activity follow a fixed path - say 5% growth per year after the initial 20 year period (when most mined bitcoins will have already been mined).

                If the total of all transactions is below the goal (over the last week say) then the multiplier is slightly more than 1
                If the total of all transactions is above the goal then the multiplier is slightly less than 1.

This second bullet is novel to bitcoin.
FooDSt4mP
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April 10, 2011, 04:11:18 PM
 #26

Here's an example, let's say:

A owns $100
B owns $1
C owns $1
D owns $1
E owns $1
F owns $1
G owns $1


So A is 100 times richer than everyone else through hard work or sheer luck, whatever... for argument's sake let's say that's his rightful position in society.

Now G decides to distribute some new money equally and gives $1000 to everyone.

A now owns $1100
B now owns $1001
C now owns $1001
D now owns $1001
E now owns $1001
F now owns $1001
G now owns $1001

How is that 'fair' to all but obliterate A's purchasing power and position in society that he worked so hard to achieve?




Because if that were the situation, I really doubt A's purchasing power was achieved through anything other the forceful coercion.  How does 1 out of 7 people manage to gain 93% of the wealth in a free market?  I don't think it's possible.  Unfortunately, that example is remarkably similar to the stratification that exists today in America... not because of hard work, or sheer luck, but because of abuses of power and legalized corruption.

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April 10, 2011, 04:21:36 PM
 #27

How does 1 out of 7 people manage to gain 93% of the wealth in a free market?  I don't think it's possible.

I guess that is ultimately where our disagreement arises from then, and I have nothing further to add.

FooDSt4mP
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April 10, 2011, 04:45:58 PM
 #28

How does 1 out of 7 people manage to gain 93% of the wealth in a free market?  I don't think it's possible.

I guess that is ultimately where our disagreement arises from then, and I have nothing further to add.


I suppose your argument would still hold for a more reasonable disparity.  And I agree it's not fair.  However, I believe the only reason poverty exists today is because of greed.  There is plenty to go around, and it is hoarders of capital that prevent it from being shared.  I don't really believe such a system should be put in place... welfare is a huge sinkhole that grows, especially when what you get increased income with how many children you produce.  However, I think the world would be a better place if there was some sort of robin hood tax on the top 1% that hold 99% of the wealth.  Let people be successful, but eliminate the extreme cases where one man's decisions effect whether thousands of people will have a stable financial situation.  To that man, it's simply about maximizing profits, a very clean decision.  To the people he just put out of a job, it's about survival.  The insulation of the rich from the realities the poor face every day will be the downfall of this country unless it is addressed.  But I don't have high hopes for that.

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April 10, 2011, 04:49:59 PM
 #29

The insulation of the rich from the realities the poor face every day will be the downfall of this country unless it is addressed.

Sorry, which country? I must have missed the part where you said which country you're from.

FooDSt4mP
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April 10, 2011, 04:54:48 PM
 #30

The insulation of the rich from the realities the poor face every day will be the downfall of this country unless it is addressed.

Sorry, which country? I must have missed the part where you said which country you're from.


I mentioned America, but to be specific, the United States of America.

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April 10, 2011, 06:41:29 PM
 #31

I can't see how it could work.  If I knew my LunaCoin balance was going to be reset at midnight and it is 1 minute to midnight, I'd be crazy to accept them.  Reason backwards from there and I don't see how you could possibly have a stable economy, at least not in the last few days leading up to the reset.  People would try like crazy to get rid of their LunaCoins, and it would get harder and harder to find somebody willing to take them.

TiagoTiago asked if anything like "reset everybody's balance at the beginning of every month" has ever been tried, and it reminds me of historical debt relief, where all debts are forgiven every N years, usually by people of a certain religious background.

If I recall correctly, people were very creative about finding ways to get around it, but I don't have any references handy.


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April 10, 2011, 08:48:31 PM
 #32

Whoever trades goods for stateCoins loses.

Hence it won't eliminate poverty, because no matter how many statecoins you get each month, the baker still won't want to sell you any bread.


What if instead of a reset, everyone got 1000 new coins every month.  If we're going to have inflation, it might as well be equally distributed initially.

That would result in the opposite of what those who currently inflate are trying to achieve.

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April 10, 2011, 08:51:16 PM
 #33

if the money were doubled and distributed equally, not proportionally

Ah, I messed that up, sorry.

Definitely nothing fair about equal distribution though.


Why not?  Is unequal distribution more fair?

Most definitely, yes.

When in your example Ben B distributed equally, he stole a little bit of Alice's and Bob's purchasing power (their money), to keep for himself.

If he had distributed unequally in a proportional manner, he wouldn't have taken anything from anyone.


Then what is the point of inflating when nothing changes except store owners have to spend extra time figuring out new prices every month?

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April 10, 2011, 08:52:53 PM
 #34

If I recall correctly, people were very creative about finding ways to get around it, but I don't have any references handy.

That's what happens with any of these schemes.  If it's not backed up by force, people will ignore it and do what makes sense.  If it is backed up by force, it still happens, but transaction costs go up (and usually in more than just monetary terms).

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April 10, 2011, 09:09:36 PM
 #35

what would happen... if people stopped imagining new ways to rule over their neighbours and simply let others live in peace, building up a society through voluntary exchange and freedom?

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April 11, 2011, 03:23:58 AM
 #36

if the money were doubled and distributed equally, not proportionally

Ah, I messed that up, sorry.

Definitely nothing fair about equal distribution though.


Why not?  Is unequal distribution more fair?

Most definitely, yes.

When in your example Ben B distributed equally, he stole a little bit of Alice's and Bob's purchasing power (their money), to keep for himself.

If he had distributed unequally in a proportional manner, he wouldn't have taken anything from anyone.


Then what is the point of inflating when nothing changes except store owners have to spend extra time figuring out new prices every month?

Exactly!

There's no point whatsoever in printing new money unless it is being used as a taxing mechanism.

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April 11, 2011, 04:44:16 AM
 #37

Wait a second. The money resets every month. Yet you claim there will be "rich" people selling stuff in order to make money? What is the motivation to exchange tangible goods for money when the money will be reset every month?
...


Money would be the lube for the exchange of goods and services, people who can gather it faster will be able to aquire more goods and hire more service for the duration of the month. The rich would be those that can easilly accumulate more than what everyone starts the month with, so their buying power would be greater than the average citizen.


I expect it would stimulate people to try to find ways to give others what they want, and to do it at a price they can afford.



With this system i thought of, with a cyclical predictable reset of spendings,  everyone would have a predictable buying power; i would expect the offer and demand balancing of prices would flow smoother, reaching an optimal level quicker, experimentation with creation of new products and services would be cheaper etc; and with the virtual money being infinetly divisible, the system would be capable of handling any number of targets of spendings, and if by the end of the month most people got only a fraction of what they started with, prices would drop to adapt so people could still aquire the services and products they need.



What am i overlooking?

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April 12, 2011, 06:46:59 AM
 #38

I think it's pretty clear that people would prefer to take any other kind of money over this evaporating kind, but overlooking that now, what about things that people need to save up for? 

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April 12, 2011, 08:24:41 AM
 #39

what would happen... if people stopped imagining new ways to rule over their neighbours and simply let others live in peace, building up a society through voluntary exchange and freedom?

The ground would crack and a shivering Satan emerge to collect firewood?
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April 13, 2011, 03:16:27 AM
 #40

I think it's pretty clear that people would prefer to take any other kind of money over this evaporating kind, but overlooking that now, what about things that people need to save up for? 
I think either prices would get scaled so everyone can afford the more expensive things, or only the people who can figure out how to earn lots of money before the reset, or more likelly somthing between.

(I dont always get new reply notifications, pls send a pm when you think it has happened)

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