On The Re‐Solution of Central Banking and Hayekian Landscapes - jalToorey/IdealMoney GitHub Wiki
In a previous essay we used the tools we had gathered along the way to show:
Thus it is quite natural to say that if we consider ‘that which is ideal money’, to be Hayek's ideal of a money that has a perfectly scheduled supply to its demand, which we correlated to governing the demand with respect to a preannounced supply schedule, which then formalizes to Szabo’s bitgold observation and arrangement
With this arrangement of the problem Hayek and Nash outline in their proposals we were able to make an implementable re-arrangement of the formula:
…. with a simple process control solution which asymptotically approximates our stated ideal.
It is effectively the covenant by Satoshi of:
the current target miss shall be the new target adjustment
Which we stated in a more technically language as:
…the current computation factor prediction shall make up for the discrepancy between the last prediction
This covenant drawn out in this form allowed us to declare:
And thus we have shown the re-solution and re-synthesis of Hayek’s proposal, with Szabo’s bitgold proposal, and Nash’s Ideal Money and shown each of the three of them to have zero distance complexity between them.
They are thus as if from the same but somehow unique perspective.
From Szabo’s framework of deconstruction, we make the conclusion, that the apparent coincidental parallels between the three arguments is simultaneously so shallow from complexity consideration and standpoint both vertical (philosophizing inter-temporally) and horizontally (philosophizing inter-culturally), it's implausible that there is no significant connection between the three.
On the Re-Solution of Mises and Hayek
In order to have shown this we needed to delicately tease out the source arguments of Hayek, Mises, and Cantillon. We did this by also traversing newer arguments and systems that use the former as their sources peeling through responses to inconsistencies. We found multiple instances of nefarious efforts all over the place that can’t properly map back to the source material they refer to.
We didn’t point it out along the way but we also thus traversed and re-solved any apparent and significant discrepancies between Mises and Hayek (which originate approximately at the point of the consideration of the termination of Mises regression theorem) or at least began the framework with which to re-solve them. This isn’t an observation that originates in our work, its well explained by Selgin and we may re-visit it at another time.
In many instances the nefarious arguments are added complexity that a culture of people couldn’t be expected to traverse (although this seems intuitive from a biological and game theoretical model standpoint it's not necessary to traverse such subjects at this time).
One of the implicit tools we used to combat the adding of complexity as a barrier to cover truth is the mixture of the construction of the unbiased objective truth of the source material mixed with the nefarious framing of a computational shortcut.
In other words we pulled out the source for the truth we needed in a way only complexly satisfactory enough to bring the causal reader along but also to satisfy the expert in the field and then we ‘wrapped’ our discovery as a ‘tool’:
tool{insight}
On How to Quell A Social Sybil Attack
If we have been sincere and accurate in our efforts, what we have done is flip the onus of traversing complexity on the casual observer. On the theoretically sincere voter that wants to verify whether of not Saifedean’s wrapping of Mises and Hayek is nefarious and invalid or if our deconstruction is.
It’s an obvious face that the vast majority cannot and will not traverse any of these works.
So then we have ‘wrapped’ our insights such that any counter arguer wraps it like so:
jalsTheoriesAreShit{tool{insight}}
This way the only nefarious construction that can meme is a point to the truth of the matter. They can only wrap it shallowly and so have a great risk in even initially countering our work.
We expect then the associated social sybil attacks to dissipate in response to our works.
On extending The ducat To The Nash Equilibrium
Previously we used our tool{cantilon} which allows us to port prices from markets using money, in order to establish the theoretical claim that Bitcoin was a FULLY free flowing commodity in the field of currency exchanges simply IF it had an associated exchange price.
This is an observation that is formulated to map well to Hayek’s work:
The mere fact that there is one price for any commodity—or rather that local prices are connected in a manner determined by the cost of transport, etc.—brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process.
On a Metaphorical Level And The Language To Describe Our Formalization of Ideal Money
We recall Hayek’s outline of the problem to solve when considering construction ‘a rational economic order?’
It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.
Let us however think of this problem as an construction from Hayek’s view-but from an invalid view. It is invalid in that it structures the problem in a way that breaks axioms Hayek wants to consider not breaking, but allows us a useful demonstration (in his system he would thus never forbid us from using the construction as a device!)...
We want to ask how we optimally distribute the resources of the world. And so we ask how do we coordinate relations among the Nations?
These are considerations of a “Hayekian” landscape that he paints as follows:
I shall assume for the rest of this discussion that it will be possible to establish a number of institutions in various parts of the world which are free to issue notes incompetition and similarly to carry cheque accounts in their individual denominations. I shall call these institutions simply 'banks', or 'issue banks' when necessary to distinguish them from other banks that do not choose to issue notes. I shall further assume that the name or denomination a bank chooses for its issue will be protected like a brand name or trade mark against unauthorised use, and that there will be the same protection against forgery as against that of any other document. These banks will then be vying for the use of their issue by the public by making them as convenient to use as possible.
On the Re-solution Of Private Banks and Commercial Banks
There is the ability to make observations of an economic and culture kind in regard to the horizontal type of the vertical type This kind of observation of recursive parallels is well captured in Nash’s observations and sentiments here:
National Money and Provincial Money If the money used in the central capital areas of a nation is also used in the provinces and if the provinces also have governments and local taxes then the quality of the money ordained by the Sovereign on the national level will affect the conditions for trade and investment, etc. in any province. For example we could think of the UK and of Scotland as the province. If, say, a Scot named Adam Smith has a temporary surplus of earned income over expenses then what can he do with this surplus that is both cautious and wise?
Mr. Smith must logically have some concern over the conjectural probabilities regarding the value of the currency he would use (which we can presume to have the same value per unit as that used in London).
In Switzerland the analogous provinces are the “cantons”. And these cantons typically may have a cantonal bank which is, in a sense, comparable to an office of a postal savings system. But each cantonal bank is under local control and administration.
A depositor in such a provincial bank MIGHT be able to save a little money with a modest level of efficiency, but ONLY if the characteristics of the money standard which is used to define his/her account are favorable.
Thus we can see how the cantons of Switzerland themselves, as economic entities, have an interest in the qualities of the exchange medium that is provided by the Sovereign (Confederation). And similarly in Edinburgh there is the possibility of locally founded concerns about the pound.
In relation to these considerations I suggest that, in general, if the money that must be used by a set of provinces of an aggregative state is of a comparatively higher level of quality then that this circumstance can favor decisions in the provinces in favor of more thrifty options or alternatives.
On the Apparent Horizontal Complexity Distance Between Commercial Banks In A Central Banking Framework Versus A Private Bank In a Private Banking Network
However, there is an apparent impasse in regard to the comparison of banks of the commercial type that exist in central banks and the types of banks that exist in the thought experiments (and history accounts) of the free-banking or private banking kind.
It is as if the commercial banks in the central-banking world function on the axiom that their base currency has quantity theory of money assumptions (that for all intents and purposes the local banks can treat their national currency as if like gold) in contrast to the private banking thought experiment in which the private banks specifically tend to the concept that NO such currencies have this principle intrinsically (they must rather convince the markets to demand them in respect to their issuance in a private banking field!).
On the Satoshi View of The Limitations of the Impossibility Trilemma
We showed in our previous essay that Satoshi wasn’t restricted by the Trilemma as he wasn’t an actual nation with an economy to govern and so on the plain of currency exchange prices’ Bitcoin’s capital flowed freely, its exchange prices were managed, and Satoshi was able to establish a monetary order.
On Nations That Rely On Trilemma Strategies With Strict Currency Controls
As a corollary, nations with Trilemma strategies that rely on the strict capital controls might find a new invader to their culture which only needs to have an established exchange price (tool{cantillon}) with the besieged culture’s currency.
This would cause tillema considerations to begin to shake such cultures.
On Hidden Axioms of Central Banking
Consider Nash’s inquiry into the axioms of central banking:
I think there is a good analogy to mathematical theories like, for example, "class field theory". In mathematics a set of axioms can be taken as a found- ation and then an area for theoretical study is brought into being. For example, if one set of axioms is specified and accepted we have the theory of rings while if another set of axioms is the foundation we have the theory of Moufang loops
We want to consider the axioms and implicit axioms of central banking that may be illuminated from Satoshi’s view. That is to say before Bitcoin Satoshi existed we didn’t know we were thinking with a limited framework. We consider the axioms that define our limiting framework:
So I feel that the macroeconomics of the Keynesians is comparable to a scientific study of a mathematical area which is carried out with an insuffic- ient set of axioms.
We want to consider here the missing axiom Nash highlights is in a sense the hidden axiom that was unnecessarily applied (in Hayek’s system the other axioms naturally produce this result and such is the very SPECIFIC crux of his proposal):
The missing axiom is simply an accepted axiom that the money being put into circulation by the central authorities should be so handled as to maintain, over long terms of time, a stable value.
On Embedding a Hayekian Field Into an Existing Central Banking Framework
We want to consider how we would introduce the field of private banking in which banks are axiomized to treat all other currencies with comparative relation and caution (rather than as being intrinsically valueable such as gold can be easily thought of) versus a field in which the framework is such that there existing hierarchies of currencies that fall under a handful of major currencies.
In the latter the commercial banks are axiomized on the belief that their national or major sponsor works on the quantity theory money basis as if it is gold.
The central bank itself provides the money basis, functioning on an international view, and has its own considerations to this regard.
A Clever Short Cut For Embedding a Central banking Framework into a Hayekian Landscape/Field
Here call upon another clever observation.
Consider Hayek’s argument but without considerations of the internal works of the nations that otherwise represent the major economies and recall Hayek said:
The purpose of this scheme is to impose upon existing monetary and financial agencies a very much needed discipline by making it impossible for any of them, or for any length of time, to issue a kind of money substantially less reliable and useful than the money of any other
What central banking are now in the position to do because of Bitcoin’s implications to their trilemma strategies, and because a Hayekian landscape alleviates the problem of the Triffin Dilemma is what Hayek describes as the intentions of his proposal:
The main advantage of the proposed scheme, in other words, is that it would prevent governments from 'protecting' the currencies they issue against the harmful consequences of their own pleasures, and therefore prevent them from further employing these harmful tools.
On the Self Interested Nature of Central Banks
Notice again the Triffin dilemma:
The Triffin dilemma or Triffin paradox is the conflict of economic interests that arises between short-term domestic and long-term international objectives for countries whose currencies serve as global reserve currencies.
Isn’t it a corollary then that the local concerns of a central bank are different from the inter-nation concerts it might face?
On Embedding a Private Banking Framework In a Central Banking Landscape
How does the organization of a set of private banks under a clearing house differ, in its efforts, from a central banking that forces a monopoly on the commercial banks that serve its monopolistic currency?
From an international Hayekian consideration of the organization and optimization of the major currency supplies with respect to the inter-relational stability of their prices, their internal organization is irre-levant.
Another incredible release of energy-the re-solution of private and commercial banking!
On a New Signal For DucatH Measurement
What Bitcoin’s exchange price existing in the respect to every other major currency does is give a competitive market signal to which the effects Hayek describes here:
They would become unable to conceal the depreciation of the money they issue, to prevent an outflow of money, capital, and other resources as a result of making their home use unfavourable, or to control prices-all measures which would, of course,. tend to destroy the Common Market. The scheme would indeed seem to satisfy all the requirements of a common market better than a common currency without the need to establish a new international agency or to confer new powers on a supra-national authority.
And thus we have mapped our orientation perfectly to Hayek’s proposal:
The scheme would, to all intents and purposes, amount to a displacement of the national circulations only if the national monetary authorities misbehaved. Even then they could still ward off a complete displacement of the national currency by rapidly changing their ways.
On the Zero Complexity Distance of Considering A Hayekian Landscape of Central Banks as Private Banks By Ignoring Their Underlying Commercial Bank Networks And the Nashian Orientation of Bitcoin
This also extend and maps Nash’s observations in the same way as Hayek’s:
Now, after some years of thought and observations, I feel that the sort of authority or agency that would be able to establish any version of ideal money (money intrinsically not subject to inflation) would be necessarily comparable to classical “Sovereigns” or “Seigneurs” who have provided practical media for use in traders’ exchanges. We can prepare to appropriately respect the functioning of such an agency (conceivably like the IMF or BIS or ECB) and concede to the effective agency some discretion about the specific form of a guiding index of prices.
But here is where I see the importance of honesty, as if like the honesty of a well-regarded classical European monarch or emperor
This also maps with zero complexity distance with Satoshi’s introduction to Bitcoin when he describes the root of the problem with conventional currency:
The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.
On the Satoshian View of the Intern-National Pricing System He Bestowed
Re-call again Hayek on the problem of rational social order:
It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.
Re-consider now his essay on the Use of Knowledge of Money, not from an individual and private banking landscape but rather from one of a Satoshi view of a Hayekian field, or a central-banking framework of interactions among nations, who each have their own complex array of specializations:
It is with respect to this that practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active coöperation. We need to remember only how much we have to learn in any occupation after we have completed our theoretical training, how big a part of our working life we spend learning particular jobs, and how valuable an asset in all walks of life is knowledge of people, of local conditions, and of special circumstances.
And it is prices that allows for this type of organization of knowledge of this kind:
Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan. It is worth contemplating for a moment a very simple and commonplace instance of the action of the price system to see what precisely it accomplishes
This is because prices can bring together all of the necessary information that otherwise suffers from the problem of necessary simultaneity. In a Hayekian landscape, the information gathered by the economies of otherwise competing nations are intrinsic in the exchange prices of their currencies thus:
The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. The mere fact that there is one price for any commodity—or rather that local prices are connected in a manner determined by the cost of transport, etc.—brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process.
It is as if these Hayekian prices allowed Satoshi, who knows all of the inner workings of all of the economies of all of the nations, to spread his knowledge continuously and simultaneously across such nations. Each of the nations, regardless of their intentions and efforts, both give clear and instantaneous information of their own local orders as well as receive the same from all other nations with their currencies exchange prices.
On the Mapping of the Satoshian Landscape As a Factor of Metcalfe Efficiency Improvements in the Global Economy
Observe Hayek paint the SATOSHIAN landscape of the interactions of major currency prices with Bitcoin:
It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement.
Once again our framing of the new plain of currency pricing, the efficiency of enforcing the relevance of Hayek’s axioms, allows us to observe the natural implications of Satoshi's Bitcoin as mapped by a factor of metcalfe efficiency.
(The reader is probably exhausted by now because of the many times we have arranged our observations to map to Metcalfe's law. And this instance is a good example of being different to traverse the question of “didn’t we map this already?”. Obviously then we have been building up an argument for the generalization of this).
On the Re-Solution Of Free-banking and Central-banking And the Re-Cursive Inner Workings of Each
Simply put it's as if we didn’t realize a simple solution to the world's problems is to add an indifferent-to-political-pressure issued ducatH.
Remember too, it’s NOT about being a finitely supplied money as the supply schedule is only PART of the problem. And even realizing the demand side is the side that needs to be deconstructed is brilliant in and of itself (this is another dig at maximalists who only know of what Saifedean teaches them is the ‘brilliance’ of a finite supply which by ALL accounts of the work they he cite's is invalid an ideal money).
Bitcoin fits as a ducatH money because its demand side self-regulates to match its pre-determined supply schedule. This satisfies the properties of a ducatH, Hayek states as having a supply governing to match its demand, by tending to the demand so it matches the supply.
On the Re-Solution of Landscapes
From a ducatH perspective of central-banked monies they are free to simply target the exchange price of other perfectly managed ducat monies and so they can just peg their exchange price to Bitcoin.
From a local domestic and cultural perspective of each of the different major civilizations around the world this is a very complex statement.
But from a Satoshi or Hayekian view the inner workings of these cultures are thus rendered complexity negligible...in the longer term monies that are exchange stable with Bitcoin will be ducatH regardless of their inner workings