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Apply HN: Gresham Dollar – Viral Currency for Basic Income

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Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#91

Post by Suncho »

gruvious wrote: post #89
gruvious wrote: post #87

Earlier quoted context omitted.

What I understood was that, if GD is allowed to sit in an account, it will eventually convert to USD at the reserve rate for that account, thus losing value (assuming GD=USD in terms of purchasing power). Wouldn't this discourage people from keeping large sums of GD in their accounts?

OK, your other comment clarified the point for me. I thought that you would lose GD after the 30days because only a percentage of it would convert. I guess I assumed that the rest would be lost instead of resetting or rolling over.

In normal times, 100% of GD (subject to the Activation Cap) converts to USD and none of it rolls over. Only during Disruption is some of the GD held back from converting. And other weird stuff is going on during Disruption too.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#92

Post by Suncho »

hc07 wrote: post #80
Suncho wrote: post #66

Earlier quoted context omitted.

The glib answer I usually give people is that it would be great if someone stole my idea because then the world's economy would fix itself without my help. I'd just go back to having fun and doing my own thing. I've long assumed that basic income was inevitable. I didn't know how we'd get there, but I was optimistic about the future. I still believe that basic income is inevitable, but now I have a way to help it hap…

I'm thinking bigger than Wal-Mart. I'm thinking the world's largest foreign reserve owners, China and Japan. In fact, in China's attempt to weaken their yuan, do capital controls, provide growth and jobs to they're lowest populace so the central govt doesn't face revolt -- You see the shadow of GD and BI China even went so far to implement economically irrational activities like state owned enterprises, whose primary…

China and Japan each have their own currencies. If they wanted to provide a basic income right now, they could pay for it by issuing new Yuan or Yen. The Gresham's Law hack is for bootstrapping a new currency, so they don't need it.

But so long as they forgo basic income, their currencies are vulnerable to disruption by a currency like Gresham Dollar.

China is inventing fake jobs and facilitating a massive credit bubble in an effort to prop up economic growth.

Taken together, a lot of your Gresham dollars / basic income properties are already in place. In spirit at least.

In what sense? Basic income is continually replenishes the economy with fresh money, lessening the role of unstable credit. That's not what's happening in China.

And we see the flaws/limits.

Do you believe that Gresham Dollar would lead to a credit bubble?

And the basic incompatibility of long term BI sapping productive parts of the country, all show up.

I'm not convinced that China's state-owned enterprises are a useful proxy for basic income.

Do you believe that basic income would sap productive parts of the economy?

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#93

Post by Suncho »

hc07 wrote: post #78
Suncho wrote: post #41

Earlier quoted context omitted.

These are important points. Thanks for bringing them up. * Someone with a deep pocket decides to buy as much as possible at a high discount, say 1 cent per dollar, and wait 30 days and get a 100x gain in a month. * We've addressed this concern in a very specific way through something I call the "activation cap" on GD, which limits the pace at which GD can convert to USD. The activation cap doesn't apply to merchants…

I like the analogy from Argentina. Bank runs equivalent is the major weakness - or people who profit from runs will attack it to make it happen. See Soros. GD, if it's meant to create distrust and runs, almost by definition must over time lose its value compared to USD. It might start off 1:1 with us US dollar, but it must drop for the simple fact because it's supply will exceed USD. There are more complex issues I'm…

GD, if it's meant to create distrust and runs, almost by definition must over time lose its value compared to USD.

Gresham Dollar is not meant to create distrust and runs. It's meant to withstand distrust and the psychology behind currency runs. If people want to get rid of their GD, the only option they have to spend it. Spending GD resets its lifetime, so the same psychology that would normally deplete the reserves of a central bank has the opposite effect on the USD reserves backing Gresham Dollar.

Are you worried that a Gresham Dollar panic would increase monetary velocity enough to kick off an inflationary feedback loop? I'm not worried about that. The same panic would also strengthen Gresham Dollar's peg to USD by making our USD reserves last longer. And because the peg would remain strong, any inflationary effects would affect GD and USD equally.

It might start off 1:1 with us US dollar, but it must drop for the simple fact because it's supply will exceed USD.

Do you feel that merchants would refuse to agree to reserve requirements below 100%?

That's another fundamental problem with currency or its like -- the entire human race is really not just cooperating with it, every one will also try to game it. It's like a horde of intelligent learning agents trying to bring it down for his own benefit.

Some people are definitely doing that, yeah. One "attack" that I could imagine being carried out against Gresham Dollar is if a GD dealer sold a large amount GD people who were under their Activation Cap to help then "top off." This would cause us to burn through our USD reserves more quickly because more GD would be active.

There are other possibilities, but I'm not worried about something like a currency run panic.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#94

Post by Suncho »

hc07 wrote: post #79

I want to explore another angle of this point I brought up (i mentioned this below for a different point): "What's the point of basic income then if eventually tens of thousands of GD is required to buy bread and basic income is only several thousand (point is, not enough to make a difference)? This happens in a sort of way in real life already... Because govt meddle in education loans and subsidies for college, the…

Another effect is that not only would GD be viral, BI inside this system itself would become viral.

By "viral," do you mean "inflationary"?

I'm not sure how useful it is to compare student loans to basic income. Student loans have to be paid back. And they can only go toward college, so they cause market distortions that a basic income wouldn't cause.

Many of the products and services we use benefit from economy of scale. The more we produce of a particular product, the cheaper it becomes to produce each individual unit. If we give people money to buy more goods, we will scale up to produce more goods to sell to them, which in no way pushes prices higher. A basic income won't, on its own, lead to general price inflation.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#95

Post by Suncho »

dredmorbius wrote: post #68

Having had some time to consider this, questions and observations. (Some duplication of HN discussion -- it unfortunately pretty much dies after a day or so, G+ has the advantage of keeping those interested in a discussion looped in.) 1. How do you make money doing this? 2. Where does the investment for USD come from? How is this renewed? How are loans and/or investors paid back? What risks do they face? 3. What are…

5. How do you plan to crack this market? The existing consumer revolving credit market is pretty resistant to entry. The two biggest players, Visa and MasterCard, both originated as large bank-based credit cards (BankAmericard => Visa and InterBank Master Charge => MasterCard). Other contenders include American Express (financial services, origins related to Wells Fargo in the 19th century), Discover (3rd largest card, though distantly, also acquired Diners Club which I was going to list separately), but they've failed to make major inroads against the two giants.

Hmm. As far as I can tell, Gresham Dollar isn't a form of revolving credit.

Our initial users are going to be people who have little money or income. These are users nobody else is competing for.

Is that what you're asking?

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#96

Post by Suncho »

dredmorbius wrote: post #68

Having had some time to consider this, questions and observations. (Some duplication of HN discussion -- it unfortunately pretty much dies after a day or so, G+ has the advantage of keeping those interested in a discussion looped in.) 1. How do you make money doing this? 2. Where does the investment for USD come from? How is this renewed? How are loans and/or investors paid back? What risks do they face? 3. What are…

6. The "Gresham's Law" bit seems to apply to holders. The key being that people will spend the currency faster if they lose faith in it. But this assumes that the _sellers_ will accept the currency. A loss of _seller_ acceptance will in fact torpedo the currency. I strongly recommend William Stanley Jevons, _Money and the Mechanism of Exchange_, which still serves as the foundation of much thinking on money (~1880).

The plan is to maintain a growing number of contracted merchant partners. If our merchant partners spontaneously stopped accepting Gresham Dollar, they'd legally violate their contract.

As part of their contracts, the merchants must set the same price in USD and GD. Their reward is that their account balance is not subject to the Activation Cap, so all of their GD will convert to USD.

Thanks for the book suggestion. I've added it to my list.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#97

Post by Suncho »

dredmorbius wrote: post #68

Having had some time to consider this, questions and observations. (Some duplication of HN discussion -- it unfortunately pretty much dies after a day or so, G+ has the advantage of keeping those interested in a discussion looped in.) 1. How do you make money doing this? 2. Where does the investment for USD come from? How is this renewed? How are loans and/or investors paid back? What risks do they face? 3. What are…

7. How is this not a Ponzi scheme? https://en.wikipedia.org/wiki/MMM_%28Ponzi_scheme_company%29...

Hmm. How would it be? Which part of it looks like a Ponzi scheme to you?

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#99

Post by hc07 »

Suncho wrote: post #94
hc07 wrote: post #79

I want to explore another angle of this point I brought up (i mentioned this below for a different point): "What's the point of basic income then if eventually tens of thousands of GD is required to buy bread and basic income is only several thousand (point is, not enough to make a difference)? This happens in a sort of way in real life already... Because govt meddle in education loans and subsidies for college, the…

Another effect is that not only would GD be viral, BI inside this system itself would become viral. By "viral," do you mean "inflationary"? I'm not sure how useful it is to compare student loans to basic income. Student loans have to be paid back. And they can only go toward college, so they cause market distortions that a basic income wouldn't cause. Many of the products and services we use benefit from economy of s…

By "viral," do you mean "inflationary"?

Not just inflationary. I mean that the Basic Income inside this system, will seek out and destroy "actual income". It weakens actual income to the point of irrelevance over time, just like what is happening in any govt subsidized fields.

Simple inflation driven by growth is arguably a "good thing". But instead we get inflation driven by "free-money" driving out "earned-money", this is almost the worst kind.

People who don't need or qualify for BI, who makes money the hard way, will now need to compete with money from BI, or worse, this BI that is in this viral currency.

Yes, inflation is the symptom but not the result. Because people spending BI GS don't feel pain (they get it again next cycle, for free), it's the people who actually do the hard work to make non-BI USD that will find that there's less they can buy.

I'm not sure how useful it is to compare student loans to basic income...And they can only go toward college, so they cause market distortions that a basic income wouldn't cause.

That's a overly bold statement. Not all production can benefit from economy of scale unless we're willing to "factory-ize" everything -- and sometimes we're just.not.willing.to for qualitative reasons. This is the difference between things you can buy in dollar stores vs things that are hard to make cheaper.

Try making Child Care more "economy of scale" like; or surgery; or education; Or nursing.

If GD can only be used to buy food, or bread. These I can believe these could be made to benefit from economy of scale, but to solve "basic income needs" esp for service intensive things that tends to be "bid up in price" when there's more demand rather than just scale? I think we're back tot he BI vs earned-income competition problem.

Student loans have to be paid back.

Not entirely true. Between grants, govt loans, and govt-guaranteed loans. There are people who will not be able to pay back the loan+inflation rate (The fact that they might take their whole lives to pay the remaining amount isn't relevant). The delta essentially means the govt have given "free money" into the system. Although it won't be the full amount.

In that effect, it acts like a BI.

Even if you take into account govt debt... If you stretch out maturity to something really long, like 30 years. Inside the window of this 30 years, before govt debt matures, it still acts like free-money into the system, much like BI is.

And we can study the effects, which is no really just inflation. Back to my point above, colleges have shown that:

Simple inflation driven by growth of earnings and demand is arguably a "good thing". But instead we get inflation driven by "free-money" driving out "earned-money", this is almost the worst kind.

Re: Apply HN: Gresham Dollar – Viral Currency for Basic Income

#100

Post by Suncho »

danielvf wrote: post #81

Gresham's law applies when businesses are legally compelled to accept better and worse money at the same rate. In your example with silver quarters, the businesses were compelled by the government to accept the new, worse coins at the same rate as the old, and thus the switch was made. However absent legal force, different currencies trade at different rates, which are set by people buying and selling them. Since you…

After living for 30 days, GD automatically converts into USD. Every time you spend it, GD's Lifetime resets back to 30 days. This is how we enforce the peg. It is the key innovation of Gresham Dollar.
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