Bringing back the Somali shilling • Hacker News Board

Re: Bringing back the Somali shilling

#151

Post by mywittyname » Thu, May 25, 2017, 6:04 PM UTC

captainmuon wrote: post #8

I crazy idea I had was using counterfeiters to mint money. Make it so that the manufacturing cost of a $100 bill is $100 minus the amount you want the counterfeiter to make, so for $1 say $99. Include tons of security features, use silk, gold, diamond dust, whatever. Then just let the market do it's thing. Have money testing machines that shred fake bank notes at sight. You may or may not want to keep punishments for…

This is hardly a crazy idea, it's basically a de facto commodity-backed currency. It's not functionally different from a bond that can be exchanged for X weight of tobacco, corn, gold, etc.

Except for the fact that shredding makes it also a lottery system: Attempts to exchange the bond result in either redemption at face value or nothing, with the probability being equal to the proportion of fake bills in circulation. Assuming, of course, that the bank has a monopoly on counterfeit-detection devices (they don't).

Re: Bringing back the Somali shilling

#152

Post by hashkb » Thu, May 25, 2017, 6:14 PM UTC

ithkuil wrote: post #143

hashkb wrote: post #140

Earlier quoted context omitted.

> let's not forget that you "create" money when you use your credit card and "destroy" it when you pay your bill Can you elaborate on that? My understanding is: when you swipe your credit card, Visa loans you money and pays it to the merchant. When you pay your bill, Visa gets money from your bank. How is that creation or destruction of money? Seems like value is conserved to me.

I believe the parent poster was mentioning the modern ability of commercial banks to actually create money through loans. There are many places to read about it, I quickly found http://positivemoney.org/how-money-works/advanced/how-commer... but there might be better sources

That article seems like an oversimplification.

Isn't the bank is still on the hook for its liabilities? It might be playing a dangerous game, but it's betting against a bank run (which are rare) and on itself having enough liquid cash on hand to handle withdrawals during reasonable circumstances. We all know banks invest our cash (in loans and tons of other vehicles) in order to earn their profits (and our interest.)

Re: Bringing back the Somali shilling

#153

Post by baddox » Thu, May 25, 2017, 6:21 PM UTC

anentropic wrote: post #102

afsina wrote: post #57

Earlier quoted context omitted.

There are a lot of literature about this. But to answer to your question, whole concept of "Market failure" is considered a myth. Just two articles among many: https://mises.org/library/market-failure-myth https://mises.org/library/response-market-failure-drones Thomas J. DiLorenzo's light book "Organized Crime" has some chapters about it as well. It is available there. https://mises.org/library/organized-crime-unvar…

In other words a faith-based ideology, where markets cannot fail by definition

I'd suggest this article as a better libertarian treatment of market failure:

"Market Failure: An Argument for and Against Government"

http://www.daviddfriedman.com/Machinery_3d_Edition/Market%20...

David Friedman doesn't deny that market failures exist, but he points out that the exact same economic phenomenon happens with government, and there's no inherent reason why government is more or less susceptible to it than markets.

Re: Bringing back the Somali shilling

#154

Post by logfromblammo » Thu, May 25, 2017, 6:56 PM UTC

r00fus wrote: post #49

petters wrote: post #45

Earlier quoted context omitted.

That is similar to have e.g. gold coins as currency. That is inefficient because it is hard to create enough of the currency for the economy to function optimally. It is also quite expensive.

Not only that, it's relatively easy to counterfeit - a modern currency note is probably harder to counterfeit (easier to validate) than a gold coin.

I wouldn't say that it's easy. You at least need some tungsten, uranium-238, rhenium, platinum, iridium, osmium, or chengdeite (Ir3Fe) most of which are nearly as expensive to obtain as actual gold. Any other material that is denser is probably also radioactive, and only available from nuclear fission reactors.

  Os  22.59 kg/L  $13k/kg   $294k/L
  Ir  22.56 kg/L  $22k/kg   $496k/L
  Pt  21.45 kg/L  $29k/kg   $622k/L
  Re  21.02 kg/L  $69k/kg  $1450k/L
  Au  19.30 kg/L  $40k/kg   $772k/L
  W   19.25 kg/L  $50/kg    $960/L
  U   19.1  kg/L $150/kg   $2900/L

The obvious choice for counterfeiters would be tungsten. A gold bar that has been hollowed out and filled it with tungsten is detectable with ultrasound. Counterfeit tungsten coins with known dimensions can be detected by measuring electrical resistance, or by doing a "ring" test, which is striking the coin with a hard object and listening to the sound it makes. The difference between the sound of a gold coin and a tungsten fake is clearer than the difference between a genuine B20 bell-bronze crash cymbal and a cymbal made from cheap brass. The gold coin will ring, while the tungsten coin will barely sustain a dull thunk.

The other noble metals are available in extremely limited supply, and usually comparable in value to gold or platinum anyway.

Devices that test for the density of gold coins are already cheap and widely available. Using a Fisch device and dropping the coin onto a countertop is just as easy as using the counterfeit detector marker, checking the watermark and color-shift inks, and looking at the security strip under a UV light.

Re: Bringing back the Somali shilling

#155

Post by [deleted] » Thu, May 25, 2017, 7:01 PM UTC

nowarninglabel wrote: post #5

This highlights well some of the conversations I have with folks who want to replace fiat currencies with cryptocurrencies. Sure, one can design a better monetary system, but that doesn't mean people are going to want to use it. You have to incentivize and enable people in order to get them to change. M-PESA and the similar mobile money telecom products are doing more for digitizing and disrupting fiat currencies tha…

[deleted]

Re: Bringing back the Somali shilling

#156

Post by yuhong » Thu, May 25, 2017, 7:41 PM UTC

IanDrake wrote: post #146

I always hated fiat currency, but I think I've come to grips with its necessity. The one thing a gold standard currency can't seem to do is control demand for it, thus its value can skyrocket. When you think of currency as a commodity, under a spiking demand their is no way to control supply so you get deflation. Rampant deflation maybe more destructive than inflation unless negative interest rates were to become soc…

The thing I really dislike is how the US economy is based on credit and consumption. The Federal Reserve probably basically regulate how fast money is printed so it has value, which is then often used to import goods from for example Japan or China. These countries then buy treasury bonds.

Re: Bringing back the Somali shilling

#157

Post by omegaworks » Thu, May 25, 2017, 8:25 PM UTC

pseingatl wrote: post #66

omegaworks wrote: post #10

>Panama has been using the dollar for decades, and this hasn't prevented it from becoming one of Central America's most successful n̶a̶t̶i̶o̶n̶s̶ tax havens. https://www.theatlantic.com/business/archive/2016/04/panama-... Fixed that for you :) Control over your currency is critical for maintaining national sovereignty, and the author waves it away like nothing. Just take what the EU forced upon Greece: https://en.wik…

Panama only ever had its own currency for a few years beginning in 1941. When Panama separated from Colombia, it used dollars. An anti-American president was elected and proposed a national currency. No one accepted it. He was soon deposed later. Panamanian coins are the same size, weight and composition of U.S. coins and are minted by the U.S. mint. Panama retains the Kennedy-size half dollar and did not adopt the n…

Rattling off a list of tangentially related facts doesn't make the point I made untrue. Sovereignty is relinquished with control of currency. Democratically opposed austerity can be imposed from those in charge of the currency.

https://www.theguardian.com/business/2015/jul/12/greek-crisi...

Currencies are tricky, but countries will (and should) go to incredible lengths to keep them working.

http://www.npr.org/sections/money/2010/10/04/130329523/how-f...

Panama wouldn't exist in its current form without the influence of the United States on its history, so it's position as a vassal country with a pinned currency may be the only one it can occupy with any stability.

https://en.wikipedia.org/wiki/Separation_of_Panama_from_Colo...

Re: Bringing back the Somali shilling

#158

Post by creepydata » Thu, May 25, 2017, 8:42 PM UTC

lowpro wrote: post #23

redblacktree wrote: post #16

Earlier quoted context omitted.

> Somalia is way worse than high-functioning governments like the United States Yet my libertarian friends on Facebook all seem to want to tear the enitre government down.

There is a difference between Anarchy and libertarianism. Most libertarians want less government, not no government.

Less than what exactly?

Re: Bringing back the Somali shilling

#159

Post by creepydata » Thu, May 25, 2017, 8:51 PM UTC

hashkb wrote: post #140

gumby wrote: post #118

> As I pointed out in my old post, there's an old and nagging question in monetary economics that has never been satisfactorily answered: why is fiat money valuable? I've always been surprised by questions like this. Why is (say) gold valuable? The gold supply fluctuates unpredictably depending on gold strikes and without any consideration for creation of underlying economic value (so is inherently inflationary, exce…

> let's not forget that you "create" money when you use your credit card and "destroy" it when you pay your bill Can you elaborate on that? My understanding is: when you swipe your credit card, Visa loans you money and pays it to the merchant. When you pay your bill, Visa gets money from your bank. How is that creation or destruction of money? Seems like value is conserved to me.

https://en.wikipedia.org/wiki/Fractional-reserve_banking

Re: Bringing back the Somali shilling

#160

Post by gumby » Thu, May 25, 2017, 9:14 PM UTC

barrkel wrote: post #134

gumby wrote: post #118

> As I pointed out in my old post, there's an old and nagging question in monetary economics that has never been satisfactorily answered: why is fiat money valuable? I've always been surprised by questions like this. Why is (say) gold valuable? The gold supply fluctuates unpredictably depending on gold strikes and without any consideration for creation of underlying economic value (so is inherently inflationary, exce…

Money: medium of exchange, store of value, unit of account. Intrinsic utility doesn't really enter into it; the value of money is inherently social, because it relates to other people. You're either going to exchange it for something now, exchange it for something in the future, or hypothesize an exchange to put a numeric value on something concrete, a number you can compare with other numbers.

Right, which is why you need the total money supply to grow/shrink roughly in proportion to the total aggregate wealth (whatever that is -- an ill-defined, poorly understood social construct which we all "kinda" know).

This is what gold bugs (and their bitc equivalents, and...) don't understand: their money supply changes randomly and completely out of phase with the actual economy, with empirical evidence of disastrous consequence. Great in theory, dreadful in practice.

Accounting has a magical provision for this at unusual sequence points (i.e. asset sales): goodwill. When the asset denomination (i.e. cost) is out of whack with what is thought to be the underlying value, the delta is magically stuck in a bin called "goodwill" which then depreciates, slowly smushing it into the overall money supply.