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What Is the Crypto Equivalent of a Stimulus Package?


MistaPrime
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1 hour ago, MistaPrime said:

@AlejoMoreno What if the money from Scenerio B can only be spend on hard assets once received? For example you cannot keep that money in circulation, it's money you have to spend on hard assets within a predefined time. Would that eliminate the inflation?

 

 

It’s inflation either way because whoever receives your money has the money in their account which effectively puts it into circulation, based on your criteria, because it isn’t going to expire on Sunday. It’s new money that exists either way.

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On 4/10/2020 at 2:12 PM, AlejoMoreno said:

Thank you for taking the time to explain.

Your proposal still does not work. Your proposal, and food stamps in theory, is just a complicated way to print money.

So let's take the expiring account with $5.57.

Scenario A = You don't spend that money and then it expires on Sunday. No inflation.

Scenario B = You pay me $5.57 for a gallon of milk (expensive I know). Well on Sunday, that money is not going to expire because you used it, and paid me. So effectively on Sunday at 23:59, $5.57 has just been printed and added into the circulating currency because you spent it. 

Yes in your individual world, you can see it as a decrease but in the net of your and I activities, AKA our economy, $5.57 was just printed when you paid me and thus cancelled it the expiring date.

So if this was done on a grand scale and everyone was given these monies that expire on Sunday 23:59 each week, then the amount of currency in circulation will increase every Sunday by the amount of this expiring money that has been spent; because once this expiring money has been spent, then it can no longer expire. 

P.S. To your original point, yes you can program this digital dollar, but why?

 

No, the money expires, regardless of who holds it, at the specified time. The question you want to answer is why would anyone accept money that they can't spend, if they are the final recipient. You can close that circuit lots of ways, the most obvious is to compel by law acceptance of the currency (legal tender) and for the gov to accept the balance from the final recipient for future tax payments. The money supply has not increased. Another way you can close it is by forcing all recipients to spend the balance on debt, while offering some kind of in kind gov transfer or tax credit for recipients with positive net worth.

What it means is you clear out debts without substantial long term structural impact on the quantity and distribution of bank deposits or consumer preferences. 

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More importantly however, is that inflation is not a function of the "money supply". The amount of money can impact prices, but its a small component for what is currently used to define inflation, which is consumption goods--these prices are sensitive to workers negotiation power, which is impacted by wage rates, household debt, and union representation. These prices are not particularly sensitive to increases in bank loans because the distribution of income and wealth is skewed away from workers. 

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On 4/10/2020 at 6:32 AM, Wandering_Dog said:

BTC and XRP are derived from an economic ideology that believes economic systems are self-correcting. Using now as an example, what would happen if we had an XRP or BTC based system:  people scramble to sell all assets, no one buys, ALL prices fall to zero, unemployment hits 100%, total political collapse, civilization ends. And that's it. 

I’m surprised no one disputed this.  
 

First off,  using now as an example,  people ARE buying as they always do when there is a fire sale.  They buy these distressed assets and make a nice profit later.  That wouldn’t change if the assets were valued purely in XRP or BTC.

Before anyone makes any assumptions, I am not advocating XRP or BTC as the worlds currency, I am just discussing what I perceive is an incorrect statement.

Next we have the extremism of the view,  why ‘go to zero’?  It’s not a normal thing that stressed systems get pushed to the absolute limit.  More typically they move a long way out on the curve,  but don’t get to the extremities.  Yes in extreme cases civilisations do collapse,  and their assets might go to zero  (but even then often have some value).  But that is not even remotely what is happening now and that, again, wouldn’t change if there was a BTC or XRP currency.

In essence, the statement you made above is that the deflationary nature of the currency would doom a civilisation, which seems extreme and so far unsupported.

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49 minutes ago, Wandering_Dog said:

No, the money expires, regardless of who holds it, at the specified time. The question you want to answer is why would anyone accept money that they can't spend, if they are the final recipient. You can close that circuit lots of ways, the most obvious is to compel by law acceptance of the currency (legal tender) and for the gov to accept the balance from the final recipient for future tax payments. The money supply has not increased. Another way you can close it is by forcing all recipients to spend the balance on debt, while offering some kind of in kind gov transfer or tax credit for recipients with positive net worth.

What it means is you clear out debts without substantial long term structural impact on the quantity and distribution of bank deposits or consumer preferences. 

If the money expires, regardless of who holds it, then it does not work. You're saying the government will take the balance, once it expires, and apply it to future tax payments?

Well once that expired money is applied to future tax payments, then the money supply has increased. Because the government is collecting expired money instead of real money. Tax money is revenue that the government uses to fund its operations. Money supply increases at a high level when the government spends more than it collects.

When the government goes to spend money it will have to create the money to replace the expired money it has collected.

 

Edited by AlejoMoreno
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1 hour ago, Wandering_Dog said:

More importantly however, is that inflation is not a function of the "money supply". The amount of money can impact prices, but its a small component for what is currently used to define inflation, which is consumption goods--these prices are sensitive to workers negotiation power, which is impacted by wage rates, household debt, and union representation. These prices are not particularly sensitive to increases in bank loans because the distribution of income and wealth is skewed away from workers. 

 

Quote

the distribution of income and wealth is skewed away from workers. 

The one statement of fact amid all this speculation.  Perhaps it's time for a change?

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10 hours ago, Wandering_Dog said:

You can close that circuit lots of ways, the most obvious is to compel by law 

Brilliant 

10 hours ago, Wandering_Dog said:

and for the gov to accept the balance from the final recipient for future tax payments.

Money supply increases by the amount that would have disappeared from the other account. 

Hey is this your airport :wacko2:

 

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13 hours ago, AlejoMoreno said:

If the money expires, regardless of who holds it, then it does not work. You're saying the government will take the balance, once it expires, and apply it to future tax payments?

Well once that expired money is applied to future tax payments, then the money supply has increased. Because the government is collecting expired money instead of real money. Tax money is revenue that the government uses to fund its operations. Money supply increases at a high level when the government spends more than it collects.

When the government goes to spend money it will have to create the money to replace the expired money it has collected.

 

This is false. Gov doesn't tax to spend, your causality at the Federal level is reversed.

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3 hours ago, jcdenton said:

Brilliant 

Money supply increases by the amount that would have disappeared from the other account. 

Hey is this your airport :wacko2:

 

The tax is a drain, its not spent back into the economy by the gov. You can see this for yourself by actually running the balance sheets.

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13 hours ago, Dogowner5 said:

I’m surprised no one disputed this.  
 

First off,  using now as an example,  people ARE buying as they always do when there is a fire sale.  They buy these distressed assets and make a nice profit later.  That wouldn’t change if the assets were valued purely in XRP or BTC.

Before anyone makes any assumptions, I am not advocating XRP or BTC as the worlds currency, I am just discussing what I perceive is an incorrect statement.

Next we have the extremism of the view,  why ‘go to zero’?  It’s not a normal thing that stressed systems get pushed to the absolute limit.  More typically they move a long way out on the curve,  but don’t get to the extremities.  Yes in extreme cases civilisations do collapse,  and their assets might go to zero  (but even then often have some value).  But that is not even remotely what is happening now and that, again, wouldn’t change if there was a BTC or XRP currency.

In essence, the statement you made above is that the deflationary nature of the currency would doom a civilisation, which seems extreme and so far unsupported.

That is what just happened. Without fed intervention, everything would have gone to zero. The Fed is really skewing your perception here. Just FYI, no one was buying, not even treasuries. 

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