Edited to remove some kind of unintentional formatting issue with using dollar signs
One wonders how exchange rates would work with “traditional” currencies? There is little incentive to buy Democratic Dollars (‘DDs’ for short) with US dollars (just ‘dollars’, hereafter), for example, since the dollar is more durable over time. But buying dollars with DDs is probably a very good move. This imbalance should make the latter transaction all but prohibitively expensive. But if the exchange rates are uncoupled from buying power like that, one could simply spend their monthly allowance on (e.g.) gold and sell it later for dollars. Would we have to disallow direct exchange between the two systems? If so, what consequence proceeds from doing the gold thing anyway in order to hoard value derived from the DDs?
Perhaps the DD would only have buying power in certain sectors? I don’t really see how that would prevent the exploit, though. It would only make it more complex.
I’m sure I would expect (e.g.) supermarkets to accept DD, but their profit margins are razor thin as it is. Having a percentage of that money decay every interval would be actively destructive to many companies unless there was a way to lock in value somehow.
I admit I haven’t given it a huge amount of thought at this point, but I can’t yet see how this system as presented wouldn’t become something like a token that could maybe be used to place small bets between private parties, but which had no value in the goods economy.
The idea is intriguing, though. I’d be very interested for my first impression to be wrong on this one!
I think Charlie Steiner’s observation in a different thread on this post is accurate: the main question is how do you make sure people sell goods in return for DDs? Or to extend my usage of the language of “sources”, how do we make the “sinks” (people who are willing to receive DDs in return for something) balance the sources (people who get the DDs in the first place)- while USD has the tax system as a standing sink, I find it interesting that Bitcoin has no sinks- but much of why people buy BTC is because they expect it to still have value in the future, which is not the case with USD or DDs; but there are also people who buy BTC because there is some transaction they want to make where BTC is the currency they want to use… but indeed, BTC isn’t actually that good of a currency to use for purchasing goods, many other cryptos do a much better job of that.
Probably the best way to create sinks for DDs is to get multiple (perhaps local) stores to all agree to sell goods in return for DDs, with common mutual knowledge of such. Either paying them extra USD to do so, or making them want to by convincing them that it is moral to do so, can make sense.
Edited to remove some kind of unintentional formatting issue with using dollar signs
One wonders how exchange rates would work with “traditional” currencies? There is little incentive to buy Democratic Dollars (‘DDs’ for short) with US dollars (just ‘dollars’, hereafter), for example, since the dollar is more durable over time. But buying dollars with DDs is probably a very good move. This imbalance should make the latter transaction all but prohibitively expensive. But if the exchange rates are uncoupled from buying power like that, one could simply spend their monthly allowance on (e.g.) gold and sell it later for dollars. Would we have to disallow direct exchange between the two systems? If so, what consequence proceeds from doing the gold thing anyway in order to hoard value derived from the DDs?
Perhaps the DD would only have buying power in certain sectors? I don’t really see how that would prevent the exploit, though. It would only make it more complex.
I’m sure I would expect (e.g.) supermarkets to accept DD, but their profit margins are razor thin as it is. Having a percentage of that money decay every interval would be actively destructive to many companies unless there was a way to lock in value somehow.
I admit I haven’t given it a huge amount of thought at this point, but I can’t yet see how this system as presented wouldn’t become something like a token that could maybe be used to place small bets between private parties, but which had no value in the goods economy.
The idea is intriguing, though. I’d be very interested for my first impression to be wrong on this one!
I think Charlie Steiner’s observation in a different thread on this post is accurate: the main question is how do you make sure people sell goods in return for DDs? Or to extend my usage of the language of “sources”, how do we make the “sinks” (people who are willing to receive DDs in return for something) balance the sources (people who get the DDs in the first place)- while USD has the tax system as a standing sink, I find it interesting that Bitcoin has no sinks- but much of why people buy BTC is because they expect it to still have value in the future, which is not the case with USD or DDs; but there are also people who buy BTC because there is some transaction they want to make where BTC is the currency they want to use… but indeed, BTC isn’t actually that good of a currency to use for purchasing goods, many other cryptos do a much better job of that.
Probably the best way to create sinks for DDs is to get multiple (perhaps local) stores to all agree to sell goods in return for DDs, with common mutual knowledge of such. Either paying them extra USD to do so, or making them want to by convincing them that it is moral to do so, can make sense.
People who buy BTC not only expect it to still have value in the future but usually expect it to have higher value in the future.