Both sides in the pointless battle between bitcoin and fiat are missing the biggest point. I’m also missing it most of the time, though I did hit it once or twice.
I was reminded of the point by the recent amazing finding about spores. Like many actively living things, spores contain an abacus that counts down every time it encounters an improvement in the surroundings. When it’s all ticked down, time to reactivate.
This delta-ness is universal in all sensory systems, though it’s generally not a literal abacus. More often it’s an analog delta, or an analog comparison between current measurement and template. The analog difference triggers one pulse or one pulse train, and those pulses are integrated in various ways by higher-level parts of the nervous system.
Money is not a store of value. Money records CHANGE in value.
A coin is not a stack of beads on the abacus. A coin is the click when a bead moves up or down.
Here’s a rehash from one time I got it right, in 2017.
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Returning again to Graybill’s Law:
The people of Free-Trade countries are therefore driven into the few occupations which are left, by reason of the destruction of their formerly more varied pursuits. Hence those diversified talents with which men are endowed are not developed but remain latent and unused, an incalculable detriment to the prosperity of their respective countries.
Let’s try to expand the notion of skill-estate, combining Graybill with Gresham.
The last time we had two INDEPENDENT AND COMPETING currencies was before 1870. Since then we’ve had one currency …. until Bitcoin. I had a hard time grasping Gresham until Bitcoin.
What Gresham really says is this: If two items both claim to be currency, and one of the items becomes much more valuable, the valuable item will NO LONGER BE A CURRENCY. It will become a COLLECTIBLE like vintage wine or classic cars. And that’s Bitcoin. It claimed to be a currency until its value rose quickly. At that point it became Picassos.
But the current Bitcoin system doesn’t even qualify as a collectible asset, because it requires ALL OF THE HOLDERS of the asset to give permission for every transaction. The permission is automatic through computers and nets, but it’s still permission.
Bitcoin is not a thing you can buy or sell openly and freely. Thus it’s not even PROPERTY. More like a trust-based inheritance.
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Now think of currency in a dynamic way.
A coin represents a DELTA of value. If you have HONESTLY acquired a coin, it means you have INCREASED THE VALUE of something. You have cut down a tree, or turned the tree into paper, or helped to print a book with the paper, or arranged books attractively in a store to raise the sale price.
We can apply Gresham as a verb to the Graybill world of SKILLS as delta-makers.
The skill that yields the greatest number of coins for a given amount of effort will become a collectible, no longer freely transferred.
What’s the highest-value skill? Counterfeiting. Money as pure numbers. What’s the SKILL or EFFORT that creates counterfeit money? No skill at all, just access to the treasury. The ratio of reward to actual labor is INFINITE. If you are a Correct Person you have access to counterfeit money. It’s an inherited trust from the start!
Among other traditional skills, what’s the lowest-value? Farming. Requires long ownership of property and generations of skill development. Payoff depends on weather, speculators, and the actions of other farmers. The ratio of reward to actual labor is small. BUT farming is critically important to the existence of civilization, so a sane civilization takes steps to subsidize farmers.
Most other skills are in the middle. Pottery, welding, weaving, programming, cooking, selling. These are available to anyone with some innate talent, but the genetic aspect is non-exclusive. Doesn’t depend on your caste or family ties. You can learn them in a year or two of apprenticeship.
These skills qualify as currency. They can be transferred freely to anyone who can use them, and they can be used freely by the recipient. The resulting delta of value depends on all sorts of internal and external factors that don’t apply to simple coins, but the basic idea is still the same.
Because these skills can be acquired (comparatively) easily, they don’t need subsidies… BUT a sane civilization will take steps to stabilize their value and avoid fakery, just as it maintains the value of coins.
And there’s the link between Gresham and Graybill. Our insane “civilization” is depriving ordinary skills of all value. Hyperinflation of skill currency, leaving ONLY ledger money, aristocrat money, with any value. The only skill that counts is the skill of being born into the correct caste.