Crypto is a petri dish for monetary policy experiments

[pmbug]

I found this discussion between Vini Barbosa and Robert Sasu (MulitversX / EGLD developer) fascinating (the issues span all of the posts in the discussion):



There are many crypto projects and every one of them struggles with determining the optimal monetary policy (inflation, deflation, fixed supply; manually/centrally managed, dynamically managed by algorithms/heuristics; etc.). It's not so easy to find the optimal solution and it really highlights the hubris of a central bank committee managing a nation's fiat currency.

 

[Casey Jones]

I know I sound like a Luddite on this.

But when a force or group embraces complexity, it's being done for a reason. The reason the Fed has gotten away with money-printing for so long is, it's not, openly, money-printing. It's a complex Kabuki move - Treasuries sold at "auction;" the FRB buys them as assets - paying with created FRNs. These "assets" are used as backing to create more e-FRNs - loaned into existence by FRB for member-banks.

A bit moar sophisticated than Ceasar cutting the silver content of Roman coinage.

Now, the operators want a way to magically stipulate gold into existence - carrying the gold derivatives into the token category.

It is indeed a social experiment; and at so many levels. This, as I described, is as deep as I need see. Money-fer-nuffin; chits for free.

 

[pmbug]

The issue of monetary policy with respect to a crypto differs from fiat in that the inflation (or deflation) of a token supply is completely transparent on the blockchain and not hidden in layers of bank credit pools.

 

[nickndfl]

Another way to do it is to deposit physical gold into a bullion bank that converts it into a gold backed crypto. They issue a debit card and charge a fee every time you use it. If it's on the BRICS mBridge system fees are minimal and the entire process is almost instantaneous. SWIFT will need to do better.