tag:blogger.com,1999:blog-8702840202604739302.post5746573397369721380..comments2024-03-12T22:00:25.991-07:00Comments on MacroMania: Money and Payments, or How we Move Marbles.David Andolfattohttp://www.blogger.com/profile/12138572028306561024noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-8702840202604739302.post-44284169606987972202015-02-03T06:09:20.146-08:002015-02-03T06:09:20.146-08:00Thanks for that reference to Shiller, Tony!
Thanks for that reference to Shiller, Tony! <br />David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-84102728458933761552015-02-03T02:23:59.006-08:002015-02-03T02:23:59.006-08:00I think I agree with all that. Technology turns w...I think I agree with all that. Technology turns what was a monopoly for the Fed into a competition.<br />Another thought.<br />In respect of money as unit of account, the monopoly, continues, even if that rests not on law, really, but consent, or eq'm. And so long as Fed money is the unit of account, the Fed can still do its job, restrained partly by mandate, and partly by the threat that if the job was done badly, contracts would become demonimated in something else, like the unidad de fomento in Chile [as described by Shiller].Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-63574314572071120712015-02-02T09:20:25.129-08:002015-02-02T09:20:25.129-08:00Is there a technical reason why the number of Bitc...Is there a technical reason why the number of Bitcoins is limited? Can this limit be removed without consequences?Anonymoushttps://www.blogger.com/profile/03931080036731071000noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-86290870725471978782015-02-02T07:29:31.097-08:002015-02-02T07:29:31.097-08:00Well, they're just balances like any other ban...Well, they're just balances like any other bank balance such as term deposits. They're distinguished by the terms under which the bank agrees to procure payments as requested, which comes down to a trade in liquidity between me and the bank where my demand for liquidity depends on how certain or otherwise I am about my future payments and receipts. The more liquidity I get (and the bank foregoes) the less interest I get. Nick Edmondshttps://www.blogger.com/profile/15342983814699700396noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-32683836844037032892015-02-02T03:52:51.188-08:002015-02-02T03:52:51.188-08:00Ah yes, and I'm glad you did! However, I wonde...Ah yes, and I'm glad you did! However, I wonder if Hayek would have agreed with me that the Fed is a competitive mechanism? I don't want to get too philosophical, but in a (Darwinian) sense, all institutions are in a severe competition. Hayek, I think, would have asked that the Fed not be afforded a monopoly right on small denomination paper note issue. But since paper money is not likely to be important anymore... :)David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-89631574563805894452015-02-02T03:46:33.432-08:002015-02-02T03:46:33.432-08:00Excellent post. You might have referenced Hayek w...Excellent post. You might have referenced Hayek with your claim that competition is the best way for us to decide what money and payments system to use.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-8480031083476016542015-02-02T03:42:22.848-08:002015-02-02T03:42:22.848-08:00Nick,
1st paragraph: seems like an unimportant de...Nick,<br /><br />1st paragraph: seems like an unimportant detail?<br />2nd paragraph: correct.<br />3rd paragraph: just balances? What is the purpose of these (low interest) balances?<br /><br />Thanks for your comments!David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-42636388489996248212015-02-02T03:40:57.699-08:002015-02-02T03:40:57.699-08:00Nice paper, thanks for the pointer!
For any of yo...Nice paper, thanks for the pointer!<br /><br />For any of your readings who are interested, I also recommend Prof. Selgin's book "Good Money" about the coin minters in England who provided small change, filling a gap left by the Bank of England.Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-28872995046106104702015-02-02T02:10:53.167-08:002015-02-02T02:10:53.167-08:00Interesting post, but I have some problems with th...Interesting post, but I have some problems with the marble analogy.<br /><br />When A pays B by means of bank "transfer", there is no actual transfer of title involved. A has a deposit and B has a deposit, but A does not transfer part of his deposit to B, even though we sometimes find it useful to speak as if he does. Rather, there is a contractual agreement between A and A's bank, whereby A agrees that the bank will debit his account, in return for which the bank will procure credit to B's account (B may use a different bank).<br /><br />Sometimes the marble analogy is OK, but sometimes it can be misleading. If A owes B $100, B owes C $100 and C owes A $100, the bank can process these payments even when A, B or C all start with zero in their accounts, i.e. even when there are no marbles in the first place. You might be able to rescue the analogy by saying that the bank creates marbles somewhere in the loop, transfers them and then destroys the marbles again, but this is a fiction and there need be no fact-of-the matter which will tell you definitively where the marbles were first created. More importantly, you then have to acknowledge that what is actually happening is closer to a froth of marbles being continually created and destroyed, many having transient existence, rather than a clear enduring stock.<br /><br />So "I view money as an object that is used to debit/credit accounts in a payments system." doesn't mean much to me. Money to me is just a measure of certain balances at particular points in time. This may not fit neatly with the ways that economists want to think of money, but I think those ways are not always helpful.<br />Nick Edmondshttps://www.blogger.com/profile/15342983814699700396noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-73146620242667955542015-02-01T20:20:27.086-08:002015-02-01T20:20:27.086-08:00You're welcome, Prof J. and thanks for the obs...You're welcome, Prof J. and thanks for the observation. Gary Gorton has a nice paper on reputation formation in the supply of private bank notes during the U.S. free-banking era: http://www.nber.org/papers/w4400David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-39789737790945903652015-02-01T17:35:17.447-08:002015-02-01T17:35:17.447-08:00Thanks for writing the background here David. This...Thanks for writing the background here David. This is implicit towards the end of your narrative, but one aspect of cryptocurrencies that is important is that it is a competitive industry. There is an incentive to keep the Bitcoin protocol as safe as possible, so that they don't lose customers to other competitors. Even now, there are a few cryptocurrency firms challenging Bitcoin. It's like in 18th century England, where there were private producers of small change. They built reputations and used the images on the observes of the coins to differentiate themselves. Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.com