[ashleyn]

* GridCoin offers comparatively low payout for the electricity required; you're not making money, you're just getting a discount on a research donation.

* GridCoin is highly inflationary and there's no inbuilt means of curtailing the supply.

[nerdponx]

There's nothing wrong with inflationary currency as long as the supply expands at a fixed/steady rate.

[beefield]

From macroeconomic perspective it does not matter if the monetary supply is fixed or just pre-defined, it is equally bad idea. If you want to have a currency that society runs on, that is.

[nerdponx]

I am talking about the rate of supply increase. A constant, predictable increase in supply over time would hopefully lead to constant, preditctable inflation.

DOGE is my favorite crypto for exactly this reason.

[beefield]

In early eighties many central banks tried targeting the amount of money in circulation to achieve stabe inflation, but failed. There is no reason to expect that a predefined rate of money supply would generate a predefined inflation. (See: gold, bitcoin)

[nerdponx]

Fair enough on the money supply point, although crypto currency so far has been somewhat isolated from the economics of nationstates, which are much more complicated than pure market forces.

My take: As long as people still "think in dollars" while they are spending cryptocurrency, purchasing power of cryptocurrencies will be pegged to the dollar. Neither gold nor bitcoin is "inflated" as currency. The dollar inflates (or doesn't), and if you want to pay for something denominated in dollars using something other than dollars, you simply convert at the current spot market rate. There won't be a Bitcoin macroeconomy until things are truly denominated in Bitcoin.

[dmichulke]

May I ask what macroeconomic perspective that is?

[beefield]

Of course. You can and want to adjust aggregate demand by monetary policy. I do not claim that current central banks do perfect job (biggest problem for the last decade has been inability to set properly negative interest rates), but at least to me it is obvious that of you do not manage aggregate demand you end up with massive cycles in economy that cause havoc.

[dnautics]

question: what is the neoliberal obsession over negative interest rates? The point of negative interest rates is to encourage borrowing and "reinvestment over saving under the mattress". Typically the lowest interest rates are given to institutional investors (aka the very wealthy) while "the rest of us" have to take on interest rates that don't beat inflation. "Reinvestment" usually means "supporting fortune 500 companies that are in index funds.

If you think about it carefully, it basically sounds an awful like trickle-down economics.

Of course, there's the babysitter's coop parable, but that seems like not a monetary failure, but the failure of a really silly centralized decision to make a unit of labor time be fixed instead of having the unit of labor float in value.

[beefield]

> what is the neoliberal obsession over negative interest rates?

Disclaimer: I am no economist, I seem to disagree with most schools of though here and following is my private thinking with no other source available.

> The point of negative interest rates is to encourage borrowing

The point of lower interest rate is to encourage current consumption, both in consumption goods and investment goods, i.e. increase aggregate demand.

When do you want to do that? Well, if there is unemployment (as in proper willingness to work but no work available), quite obviously we would like to have more demand for goods/services in the society. Of course, some of the lower interesta rate goes to e.g. real estate and in ideal world that would be compensated with higher real estate taxes to avoid bubbles there.

When do you want to do the opposite? when there is too much demand compared to current production capacity, it actually makes sense to encourage people to consume (and invest) a bit less just today to avoid all kind of bubbles that seem so common in the times of economic overheating.

You actually can see lack of negative interest rates as a real market failure, when there is a lack of demand due to too high interest rates and economic values gets not produced because of that.

> silly centralized decision to make a unit of labor time be fixed instead of having the unit of labor float in value.

Well, apologies of being a bit sarcastic, but in my view you have two options:

1. You can believe in fairy tales about flexible labor prices and actually consider it good that people have lots of uncertainty about the value of their labor tomorrow.

2. You accept the reality that wages are sticky, and most people actually like the thing that they know how much they get paid tomorrow. Unfortunately in this option you must also accept that the aggregate demand needs to be managed less it gets chaotic and/or dies completely.

[dnautics]

It's terrible because you can't steal from the poor to fund the investment adventures of the wealthy.