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Gridcoin: Rewarding Scientific Distributed Computing

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Re: Gridcoin: Rewarding Scientific Distributed Computing

#51

Post by nerdponx »

beefield wrote: post #44
nerdponx wrote: post #42

Earlier quoted context omitted.

I am talking about the rate of supply increase. A constant, predictable increase in supply over time would hopefully lead to constant, preditctable inflation. DOGE is my favorite crypto for exactly this reason.

In early eighties many central banks tried targeting the amount of money in circulation to achieve stabe inflation, but failed. There is no reason to expect that a predefined rate of money supply would generate a predefined inflation. (See: gold, bitcoin)

Fair enough on the money supply point, although crypto currency so far has been somewhat isolated from the economics of nationstates, which are much more complicated than pure market forces.

My take: As long as people still "think in dollars" while they are spending cryptocurrency, purchasing power of cryptocurrencies will be pegged to the dollar. Neither gold nor bitcoin is "inflated" as currency. The dollar inflates (or doesn't), and if you want to pay for something denominated in dollars using something other than dollars, you simply convert at the current spot market rate. There won't be a Bitcoin macroeconomy until things are truly denominated in Bitcoin.

Re: Gridcoin: Rewarding Scientific Distributed Computing

#52

Post by beefield »

dnautics wrote: post #50
beefield wrote: post #45

Earlier quoted context omitted.

Of course. You can and want to adjust aggregate demand by monetary policy. I do not claim that current central banks do perfect job (biggest problem for the last decade has been inability to set properly negative interest rates), but at least to me it is obvious that of you do not manage aggregate demand you end up with massive cycles in economy that cause havoc.

question: what is the neoliberal obsession over negative interest rates? The point of negative interest rates is to encourage borrowing and "reinvestment over saving under the mattress". Typically the lowest interest rates are given to institutional investors (aka the very wealthy) while "the rest of us" have to take on interest rates that don't beat inflation. "Reinvestment" usually means "supporting fortune 500 com…

> what is the neoliberal obsession over negative interest rates?

Disclaimer: I am no economist, I seem to disagree with most schools of though here and following is my private thinking with no other source available.

> The point of negative interest rates is to encourage borrowing

The point of lower interest rate is to encourage current consumption, both in consumption goods and investment goods, i.e. increase aggregate demand.

When do you want to do that? Well, if there is unemployment (as in proper willingness to work but no work available), quite obviously we would like to have more demand for goods/services in the society. Of course, some of the lower interesta rate goes to e.g. real estate and in ideal world that would be compensated with higher real estate taxes to avoid bubbles there.

When do you want to do the opposite? when there is too much demand compared to current production capacity, it actually makes sense to encourage people to consume (and invest) a bit less just today to avoid all kind of bubbles that seem so common in the times of economic overheating.

You actually can see lack of negative interest rates as a real market failure, when there is a lack of demand due to too high interest rates and economic values gets not produced because of that.

> silly centralized decision to make a unit of labor time be fixed instead of having the unit of labor float in value.

Well, apologies of being a bit sarcastic, but in my view you have two options:

1. You can believe in fairy tales about flexible labor prices and actually consider it good that people have lots of uncertainty about the value of their labor tomorrow.

2. You accept the reality that wages are sticky, and most people actually like the thing that they know how much they get paid tomorrow. Unfortunately in this option you must also accept that the aggregate demand needs to be managed less it gets chaotic and/or dies completely.

Re: Gridcoin: Rewarding Scientific Distributed Computing

#53

Post by dnautics »

beefield wrote: post #52
dnautics wrote: post #50

Earlier quoted context omitted.

question: what is the neoliberal obsession over negative interest rates? The point of negative interest rates is to encourage borrowing and "reinvestment over saving under the mattress". Typically the lowest interest rates are given to institutional investors (aka the very wealthy) while "the rest of us" have to take on interest rates that don't beat inflation. "Reinvestment" usually means "supporting fortune 500 com…

> what is the neoliberal obsession over negative interest rates? Disclaimer: I am no economist, I seem to disagree with most schools of though here and following is my private thinking with no other source available. > The point of negative interest rates is to encourage borrowing The point of lower interest rate is to encourage current consumption, both in consumption goods and investment goods, i.e. increase aggreg…

~>. High interest rates are a market failure.

Only if you think that unbridled growth is an inherently good thing. Let's take an example, and say we run out if oil without a good substitute. Suddenly interest rates go up, because with an uncertain future nobody wants to count of the future productivity of any given individual. Do you run around and complain that there's a market failure; interest rates are too high, we need to encourage more consumption to keep the economy running!!! Does that seem like sensible policy to you?

> 2. You accept the reality that wages are sticky, and most people actually like the thing that they know how much they get paid tomorrow.

That's fine but the prescribed solution is to devalue the notional amount people get paid. So basically you are force feeding a lie. Moreover, it's one which hurts people getting paid less more than people getting paid more. Also, lower incomes are less flexible to quit their job and find a new one because their current one isn't paying as much in real value. I'd much much rather put companies in a position where they give lower income individuals a pay cut (or find a way to make their employee's labor more valuable) as a signal that they should look for a better paying situation than boil the water underneath them slowly. Anything less is coddling businesses.

Re: Gridcoin: Rewarding Scientific Distributed Computing

#54

Post by beefield »

dnautics wrote: post #53
beefield wrote: post #52

Earlier quoted context omitted.

> what is the neoliberal obsession over negative interest rates? Disclaimer: I am no economist, I seem to disagree with most schools of though here and following is my private thinking with no other source available. > The point of negative interest rates is to encourage borrowing The point of lower interest rate is to encourage current consumption, both in consumption goods and investment goods, i.e. increase aggreg…

~>. High interest rates are a market failure. Only if you think that unbridled growth is an inherently good thing. Let's take an example, and say we run out if oil without a good substitute. Suddenly interest rates go up, because with an uncertain future nobody wants to count of the future productivity of any given individual. Do you run around and complain that there's a market failure; interest rates are too high,…

> Only if you think that unbridled growth is an inherently good thing.

This has nothing to do with growth, but with welfare not being created due to otherwise willing seller and buyer not being able to transact due to artificially restricted pricing in the market.

> That's fine but the prescribed solution is to devalue the notional amount people get paid.

I think you confuse inflation and interest rates. Negative interest rate does not devalue money (price of bread says the same over time), but if you happen to have savings, those will of course be deminishing over time. Obviously, almost by definition, it is rich people, not poor people that have savings and bear the pain of negative rates.

Re: Gridcoin: Rewarding Scientific Distributed Computing

#55

Post by dnautics »

beefield wrote: post #54
dnautics wrote: post #53

Earlier quoted context omitted.

~>. High interest rates are a market failure. Only if you think that unbridled growth is an inherently good thing. Let's take an example, and say we run out if oil without a good substitute. Suddenly interest rates go up, because with an uncertain future nobody wants to count of the future productivity of any given individual. Do you run around and complain that there's a market failure; interest rates are too high,…

> Only if you think that unbridled growth is an inherently good thing. This has nothing to do with growth, but with welfare not being created due to otherwise willing seller and buyer not being able to transact due to artificially restricted pricing in the market. > That's fine but the prescribed solution is to devalue the notional amount people get paid. I think you confuse inflation and interest rates. Negative int…

Negative interest rate stimulates borrowing, which is an increase in the money supply, which is inflation. This is precisely the policy mechanism by which it's supposed to work. If you deny that negative interest rates cause inflation, you deny the raison d'être of the negative interest rate.

Rich people are not counting on savings interest to make money. They have investments. For example, land. With negative inflation rate, you encourage mortgage lending, which drives up the price of land, which is great for rich people. Similar careful analysis of what actually rich people do with their money will reveal likewise fashions by which a negative interest rate helps the wealthy.

Re: Gridcoin: Rewarding Scientific Distributed Computing

#56

Post by SubiculumCode »

rebuilder wrote: post #27
SubiculumCode wrote: post #25

I thought of this idea a couple of weeks ago. Make the mining aspect useful work (e.g. solve folding proteins). I am glad someone is doing this. An excellent idea.

But how do you do it without centralizing coin issuance?

I overstated. I just had the thought that it would be nice if coin issuance would depend on some type of useful work (e.g. protein folding), and was glad to see that others who know a whole lot more about how cryptocurrency works, have created schemes to do just that. I have no idea on how to do it without centralizing coin issuance.

Re: Gridcoin: Rewarding Scientific Distributed Computing

#57

Post by rebuilder »

SubiculumCode wrote: post #56
rebuilder wrote: post #27

Earlier quoted context omitted.

But how do you do it without centralizing coin issuance?

I overstated. I just had the thought that it would be nice if coin issuance would depend on some type of useful work (e.g. protein folding), and was glad to see that others who know a whole lot more about how cryptocurrency works, have created schemes to do just that. I have no idea on how to do it without centralizing coin issuance.

Unfortunately, no-one seems to know how to do it. It is a pretty hard problem: issuance tied to proof of work works because the solutions it generates are unique but machine verifiable. Unfortunately, problems with solutions that fulfill that requirement tend not to be very useful in and of themselves.

Edit: this is well beyond my expertise, perhaps someone with a better understanding of information theory can prove the above statement wrong. In that case, I hope they go out and build a crypto of their own!

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