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What Is the Crypto Equivalent of a Stimulus Package?


MistaPrime
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I wrote an article here titled "How Will Bitcoin Handle Economic Halts and Stimulus Needs?" and I tied it with a global vision with XRP and the Internet of Value.

But what do you guys think about that question?

If we had Bitcoin or XRP or any crypto being the world's currency. Then what can we do in case of a pandemic where people need extra money to survive since the economy is halted? We certainly can't just print more like the Feds do.

Does XRP or any other Crypto have a solution to this?

Edited by MistaPrime
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"What Is the Crypto Equivalent of a Stimulus Package?"

A basic and direct way to incentivize economic activity to induce people, companies, etc. to spend is by creating inflation by introduction lots of new XRP into the system (but only for a selected few) so that the inflation rate exceed the net rate at which the value of XRP are increasing over the long term, so the majority (because only a few received these new XRP) of people are incentivized to spend their XRP in the short term while XRP maintains a relatively high value in the short term.

Just my opinion from a mathematical perspective.

Edited by enrique11
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@enrique11 Would your solution work in an emergency crisis? 
Imagine if you worked at a restaurant and you only had $1 XRP in savings.
The restaurant sends you home and tells you that you will not get paid anymore.
How will you survive?
What will you eat?

60% of Americans do not have more than $400 in savings. They cannot last a month without getting paid. Hence the stimulus package by the government. They are printing money as emergency in this crisis.

What can the crypto systems do in an emergency crisis?

 

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The solution I gave IMO (just looking at the math on a basic level) is just a way to force the majority of people to spend, so that forced economic activity is induced by the majority.  So people will spend, but because of the corona virus they can't spend at regular brick-and-mortar businesses in certain areas, and by the same token they can't go back to their employers to work to earn more money in certain areas, and they will primarily focus on necessities now, not general spending like before, so I don't see how this stimulus package will work for those people whose business are greatly affected by lack of customers or those businesses are shutdown and large non-essential companies are temporarily closed, or scale back to essential personelle. Worse yet, this is a capitalist society, so people who need the money will be forced to travel long distances in affected areas to seek new jobs temporarily, putting themselves and others at risk of Covid 19. 

I don't see how a stimulus package will work well in this pandemic...it's a global economic issue.   I think the best way to get back on our feet as Americans as quickly as possible is to force people to stay home and force people to be in quarantine until the virus becomes manageable, like SARS was, but to do that is anti-American. American culture values freedom, so, it won't go over well on the American people IMO.

If you wear a mask in public in America out of respect for yourself and others, others think you're infected; whereas in Asian cultures, they see it as a respectful gesture, and are not as paranoid as Americans - this statement is coming from me, an American.

I think our country because of it's values of freedom and capitalism backfires in the case of Covid 19.  Although personally I believe the growth rate has been in decline for the last few weeks, and the worst of it is over, a resurgence in this country would be easy because of or sense of freedom keeps us from minimizing the spread of the virus and capitalism forces most of us to interact with others to stay alive financially.  The lucky ones are those whose jobs can be done from home. 

Edited by enrique11
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The better question is why would someone be incentivized to spend a deflationary asset? That is at the crux of trying to make a currency out of a deflationary asset. No one wants to spend it. It's better off being used as back end plumbing to assist the current financial system, not as a currency used in daily transactions.

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Just now, Chris_Reeves said:

The better question is why would someone be incentivized to spend a deflationary asset? That is at the crux of trying to make a currency out of a deflationary asset. No one wants to spend it. It's better off being used as back end plumbing to assist the current financial system, not as a currency used in daily transactions.

I don't spend my crypto. I accummulate.

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The only way crypto could help with this economic " crisis " is by returning tied capital back to the banks so that there is more money to lend without the banks becoming over leveraged and in turn becoming insolvent. This could lower the amount of money being printed. Or at least being digitally injected into the balance sheets of companies. This would be a one-time bail out because once the nastro accounts are liquidated and brought back to the U.S. it is back to printing.

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27 minutes ago, Chris_Reeves said:

The better question is why would someone be incentivized to spend a deflationary asset? That is at the crux of trying to make a currency out of a deflationary asset. No one wants to spend it. It's better off being used as back end plumbing to assist the current financial system, not as a currency used in daily transactions.

Agreed.  That's an argument I made a long time ago, that Ripple deliberately made XRP deflationary so that eventually the majority of it would migrate from the hands of speculators and hodlers to the hands of those who would use it for various business-related purposes, but not for everyday spending like a regular currency.

Edited by enrique11
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11 minutes ago, xerxesramesepolybius said:

Its called Tether

It just hit me. Thanks to you.

If banks had a digital dollar, they could issue extra dollars that can only be spend during a period of time such as a crisis. Then those dollars would be burned.

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2 hours ago, enrique11 said:

"What Is the Crypto Equivalent of a Stimulus Package?"

A basic and direct way to incentivize economic activity to induce people, companies, etc. to spend is by creating inflation by introduction lots of new XRP into the system (but only for a selected few) so that the inflation rate exceed the net rate at which the value of XRP are increasing over the long term, so the majority (because only a few received these new XRP) of people are incentivized to spend their XRP in the short term while XRP maintains a relatively high value in the short term.

Just my opinion from a mathematical perspective.

That is the purpose of inflation. You do not want an economy that is based off of a deflationary currency. People will be encouraged to hold all of their cash and do nothing with it because it will always be worth more in the future.

Not insulting anyone but people who say that currency should not be inflationary, don't understand economics. Currency should not be "HYPER-inflationary" but you need a controlled amount of inflation.

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6 minutes ago, MistaPrime said:

It just hit me. Thanks to you.

If banks had a digital dollar, they could issue extra dollars that can only be spend during a period of time such as a crisis. Then those dollars would be burned.

What? So if I pay you 10 "stimulus" dollars for groceries, do those dollars that I gave you get burned if you don't also spend them?

If not, then which dollars get burned and which don't?

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1 minute ago, AlejoMoreno said:

What? So if I pay you 10 "stimulus" dollars for groceries, do those dollars that I gave you get burned if you don't also spend them?

If not, then which dollars get burned and which don't?

It would be the equivalent of food stamps. How do current food stamps economics operate?

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22 minutes ago, AlejoMoreno said:

That is the purpose of inflation. You do not want an economy that is based off of a deflationary currency. People will be encouraged to hold all of their cash and do nothing with it because it will always be worth more in the future.

Not insulting anyone but people who say that currency should not be inflationary, don't understand economics. Currency should not be "HYPER-inflationary" but you need a controlled amount of inflation.

If you want people to spend money it can't keep increasing in value, otherwise your currency is acting more like a collectible, and you're much more likely to save that "collectible" for a rainy day when you need to spend it or to cash out when the market has peaked.

Edited by enrique11
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1 minute ago, enrique11 said:

If you want people to spend money it can't keep increasing in value, otherwise your currency is acting more like a collectible, and you're much more likely to save that "collectible" for a rainy day when you need it or to cash out when the market has peaked.

That's why people won't spend all of those coins that the USA minted for a temporary time (in other amounts than the normal ones today). 

 Perfect "non-cryptocurrency" example.

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