Joseph Cox - Comments
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Joseph Cox holds a degree in Intellectual History from Univ. of Pennsylvania and a Masters in Financial Analysis.

He is the author of a number of books on related to policy. The City on the ... more

Latest Comments
A Golden Bridge For Gaza
2 months ago

Freeing them from Hamas wouldn't deliver that either.

The People's Currency
2 months ago

Wow. Probably not the best baseline in that case :) I guess the 'net exports' part of GDP might end up with those earnings being appropriately tiny but also volatile.

The People's Currency
2 months ago

this doesn't have to be crypto to work.

The People's Currency
2 months ago

I forgot about El Salvador's government.. whoops. China's GDP isn't exactly transparent either. This would limit markets where you could pull this off. The US is a good one then - this is like the USD but more fiscally stable.

The People's Currency
2 months ago

Sarbelio

An offline counterparty says:

"What's the incentive for politicians to reduce monetary inflation tho. Also, part the argument for monetary inflation is to lessen the impact of economic shocks by flighting what would be deflation in a shrinking economy. If you're in debt, the value of that debt increases with deflation, making it harder to service and often creating a feedback loop or deflationary spiral"

I'm not suggesting replacing the currency, just providing people with an alternative to protect against monetary inflation. This would be a private exchange.

The attempt to lessen economic shocks by issuing more money is a black art in the extreme as revealed by the namby-pambyness of currency trading - which is just trading on expectations of expectations and is totally untethered to any 'real' value. Especially since Bretton Woods.

I, of course, am very anti-debt. But the debt only increases with deflation if your debt is fixed. In parts of Europe, banks are paying mortgage holders for holding mortgages.

If your debt moves with LIBOR, it's replacement, Fed target rates or whatever you actually end up with all sorts of manipulations you can't begin to understand are changing the price of your debt. The most dangerous is popular demand - keep interest rates low so people can borrow ends up being a formula for runaway monetary inflation.

Again, you can choose to price debt using a currency like this, but it isn't a replacement currency. The old options remain. This would be akin to people in developing economies pricing transactions in USD because their own currency is unreliable. Well, really, USD are unreliable too.

We just use USDs as the benchmark because nothing else is more reliable.

The People's Currency
2 months ago

The benchmark is important because it actually sets what the currency does. In this case it means the currency always represents a fixed slice of economic production - almost like shares in a company. No matter what the economy's actual currency does, this remains stable against the economy. If the economy actually grows - however you define it - this is more valuable. If it shrinks, this is less valuable. Either way it is tied to that economic productivity. There could easily be other benchmarks to use - measurement and frequency are the challenge.

The People's Currency
2 months ago

In reaction to an offline question about automation impacting the price of labor...

I'm not concerned about inflation per se. I'm concerned about a particular kind of inflation: monetary inflation.

You pump up the money supply and erase people's savings.

In order to counteract this, people invest in things meant to give a return or they try to benchmark against a cost of goods measure which is hopeless in a world in which the definition of a good is constantly changing.

By tying to GDP you are looking at the production side of the equation.

Automation doesn't matter. Total per capita income would remain the same or even rise with more efficiency - you'd just end up with dumb jobs priced out.

They key is the currency is tied to the size of the economy and doesn't become worth more or less without the economy growing or shrinking.

The People's Currency
2 months ago

One thing that really appeals to me is the relationship to average income. IF your coffee was 2 units, you'd know that was 2% of average daily earnings (although not yours). If your car were 20,000 units, you'd know that was 200 days earnings. It would actually make things more tangible in terms of normal work effort, the kind of debt taken on for purchases etc....

The People's Currency
2 months ago

If you wanted these characteristics adjusted for your local market there could be versions of the currency for that market. All it needs is reliable and regular GDP (or another metric) reporting. El Salvador is dollarized, but a local version of this need not be. It could be paired to El Salvador economic data and provide the benefits of a local currency without the instability such a currency would normally have.

The People's Currency
2 months ago

Anti-inflation: check. High degree of exchange: check. Easy to convert: check. Digital: check. Accepted in all the world? This depends on two factors. First, the exchange can only operate in one currency (due to buyback), but others can buy and sell this with whatever currency, good etc... they want. So it could be globally exchangeable so long as it is popular enough for financial intermediaries to provide the service. As far as being able to spend it, I could imagine a debit card that holds this currency and exchanges it for whatever local one you're spending on the spot.

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