An Interesting Biography, an Interesting Blog, and an Interesting Lecture on ‘Ideal’ Money

A certain saying I have been developing over the years goes something like this ‘Some things you cannot understand in parts’ (this saying will actually become more significant as time passes if this article has any truth to it at all). So please bare with the seemingly random or unrelated points. The material I’d like to bring to the community’s attention is quite dense, but I’ve tried to highlight the key points into one article. There is certainly more material (much more) to cover and present on this subject.

Who is John Nash?

The Man

Over 50 years ago John Forbes Nash Jr. (you might know him as the central character of the Hollywood movie/biography A Beautiful Mind played by Russell Crowe) wrote a dissertation on non-cooperate games which defined a solution later called the Nash equilibrium. The Nash equilibrium became a revolutionary concept for many subjects including war and economics. In short, Nash has been the master of games and strategies for them since the 1950’s. Since then, game theory has become a serious topic for academic study in relation to, among many other areas, economics and quantum physics.

In another paper Nash authored The bargaining problem which essentially represents a solution to the problem of bargaining in relation to a trade with and without money:

Wiki:

Nash bargaining game is a simple two-player game used to model bargaining interactions. In the Nash bargaining game, two players demand a portion of some good (usually some amount of money). If the total amount requested by the players is less than that available, both players get their request. If their total request is greater than that available, neither player gets their request.

This seems relevant since bitcoin would be the next evolution of such a concept in that we have (1) value of trade in a society (2) value of trade + money in a society (3) value of trade + money + bitcoin in a society. Bitcoin can by thought of as money^2, or a more granular or slippery type of money that hyper-facilitates trade.

(Somewhat) recently declassified letters from Nash to the NSA from 1955 were released to the public in which Nash explained in a seemingly frantic and incomprehensible letter:

The significance of this general conjecture, assuming its truth, is easy to see. It means that it is quite feasible to design ciphers that are effectively unbreakable. As ciphers become more sophisticated the game of cipher breaking by skilled teams should become a thing of the past.

Or in essence, the encryptor can always out race the decryptor. He also noted something interesting in his one of his concluding paragraphs:

If qualified opinions incline to believe in the exponential conjecture then I think we (the U.S.) can not afford not to make use of it. Also we should try to keep track of the progress of foreign nations towards unbreakable types of ciphers.

This might seem insignificant and possibly obvious, however it could also be seen as a kind of ‘intel’, in that by engaging in these correspondences Nash was able to eavesdrop on the NSA’s knowledge on the subject of encryption.

The Myth

Nash revolutionized economy, encryption, game theory, and war type strategy over 50 years ago (well before he got credit for it), but then his life changed. Here is where we want to stray slightly from the Hollywood movie and talk about his real biography.

In many interviews Nash explains he was running around thinking (and speaking) about how the governments of the world (communist and anti-communist alike) were conspiring against the peoples, and that he was going to liberate the peoples from such tyranny.

Wiki:

Nash began to show signs of extreme paranoia, and his wife later described his behaviour as erratic, as he began speaking of characters like Charles Herman and William Parcher who were putting him in danger. Nash seemed to believe that all men who wore red ties were part of a communist conspiracy against him. Nash mailed letters to embassies in Washington, D.C., declaring that they were establishing a government.

So in 1959 he was admitted to a metal institution where he was treated for paranoid schizophrenia and in 1961, both times against his will, and among other things was treated with a brutal treatment called insulin shock therapy. All this time Nash’s colleagues fought to get him out in what they describe, in a biographical documentary, as being in the interest of national security. Nash explained to his peers he would not be allowed to leave until he essentially could not do math and began to think normally. In the Hollywood movie Nash is shown taking medication to clear up his illness, but in reality it’s well known that Nash never took his medication to get better, and instead willed himself well, through what he describes as ‘logical thinking’.

Wiki:

After 1970, he was never committed to a hospital again, and he refused any further medication. According to Nash, the film A Beautiful Mind inaccurately implied that he was taking the new atypical antipsychotics during this period

When he was released he fled to Europe and tried to seek asylum, give up his American citizenship, and exchange his US dollars for the Swiss franc-a currency of better quality (in an interview he explains this is where, and when, he got the concept for Ideal Money). He was tracked down by the American Navy and brought back by ship (he claims) in chains.

The Legend

Since then it’s also well known that after putting such troubles aside Nash started a teaching career at the University of Princeton where among other things he is the inspiration behind a 50+ year old program on cooperative games solutions called the Nash Program and:

he earned the title: The Phantom of Fine Hall” [33] (Princeton’s mathematics center), a shadowy figure who would scribble arcane equations on blackboards in the middle of the night because In the years following, Nash wandered the Princeton campus, leaving cryptic formulas on blackboards. Princeton students dubbed him “The Phantom.”

Link

Enter Nick Szabo

The Anonymous Super Blogger

Nick Szabo is an anonymous blogger who seems to have entered the blogging scene around 1995. If you haven’t had an extensive look at his writings then you actually might not understand bitcoin very well. Szabo, it seems, has been patiently defining new systems for our society contingent on a new computational/economic technology (he dubs Bitgold). One of his most praised writings is a piece explaining a special history of money. He also describes many other historical advances of technology that relate to the creation of bitcoin and foreshadows smart contracts the concept behind the ethereum project that many feel will be the next biggest evolution of this evolving technology. It seems Szabo had some insight into the future of society and was able to sew some theories and fields together that were otherwise not related without bitocin. The Kula ring solution Szabo proposed (to his knowledge for the first time by anyone), describes a kind of 2-d solution for the economics of trade, whereas bitcoin would be a multidimensional example of the Kula ring solution. What also seems noteworthy is although Szabo’s works is generally exceptionally well cited, he brings up the Nash Equilibrium, but among the 30 or so citations he doesn’t cite John Nash.

The Esoteric meaning of Ideal Money

This is significant because while this was going on John Nash had been touring the world, country to country, for the last 20 or so years (since about 1995) giving a lecture called Ideal Money about a new kind of economics that is going to do away with the old Keynesian system of money printing. He talks about a coming revolution to our society in which the peoples might have a better option to store their savings, and a better avenue to exercise their market options in relation to different international currencies. He suggests the people will have a new option to be able to put pressure on governments to create a money with an (asymptotically) zero inflation rate (ie governments will have to stop destabilizing the global economy by printing money, since the the people could choose to leave their currencies for a superior options). He starts this lecture by suggesting money has a long and interesting history, which pertains to the article “Shelling out” Szabo is quite well known for. The author would like to suggest if you read Szabo’s vast works, it seems to spell out a perfect encyclopedia type book using Nash’s lecture as the outline or chapter headings.

Moreover, both Nash and Szabo are public proponents of F.A Hayek as well as Hayek’s economic theories, to which they both allude to often.

One student explained of Nash:

John Nash seemed to have a slight internet addiction Maybe he was bored with our discourse, but whenever there was a break he would ask to see my laptop so he could check his email. I noticed that kind of twitching restlessness you see so often with people these days. But this was before the ubiquity of internet enabled cell phones, so John would just reach for my laptop, and load up Quora (just kidding! He was reading math papers or news usually.)

…and under the heading ‘John Nash is a world class troll’ the student continues:

This is entirely subjective, but I think it it’s illustrative. John would sometimes do or say strange things that he could get away with saying because people thought he was crazy.

Two Interesting Memo’s from Dr.Nash

Speaking to the level of sophistication and knowledge John Nash has on computers and computer networks here is another excerpt from a rand memorandum featuring some of his ideas. We can notice the theme is the decentralization of control, and that even at that time he was still thinking far ahead of today’s technology:

This memorandum concerns some ideas for new designs of the control system in high-speed digital computers. The ideas are yet in an immature and rather unspecific form, but this is a subject that deserves some attention and thought for the future. Indeed the idea is more or less futuristic and is more appropriate for the “electronic brains” of the future than for the computers now used, or under construction, or even planned. The basic idea is simple. Instead of having a single control unit sequencing the operations of the machine in series (except for certain subsidiary operations as certain input and output functions) as is now done, the idea is to decentralize control with several different control units capable of directing various simultaneous operations and interrelating them when appropriate.

A memo from Nash’s university website:

I am speaking about a research project that is not fully complete since I have not yet written up and submitted for publication any paper or papers describing the work. Also the details of what axioms to use and how to select the basic set theory underlying the hierarchical extension to be constructed are not fully crystallized. I have also a great fear of possible error in studying topics in this area. It is not rare, historically, for systems to be proposed that are either inconsistent or that have unexpected weaknesses. So I feel that I must be cautious and proceed without rushing to a goal. And this psychology of fear has also inhibited me from consulting other persons expert in logic before I could feel that I had gotten my own ideas into good shape.

What is the Significance of “Ideal Money”?

From the conclusion of the lecture “Ideal Money”:

The Keynesians implicitly always have the argument that some good managers can do things of beneficial value, operating with the treasury and the central bank…I see this as analogous how the Bolshevik Communists were claiming to proved something much better than the Bourgeois democracy.

Further burying the ideology:

…while they have claimed to be operating for high and noble objective of general welfare what is clearly true is that they have made it easier for government to print money.

His closing statement is seemingly a big one:

And this parallel makes it seem not implausible that a process of political evolution might lead to the expectation on the part of the citizens in the great democracies that they should be better situated to be able to understand whatever will be the monetary polices which, indeed, are typically of great importance to citizens who may have alternative options for where to place their savings.

And indeed we do seem to have these “alternative options” for our savings.

It might be time to re-look at this lecture Ideal Money in response to the changing economic times, lest we overlook the significance of Nash’s works for another 30 years (it’s already been 10). The world in general, whether the peoples, the academics, or the governments and regulatory bodies seem confused and bewildered in these rapidly evolving economic times. Perhaps we should turn to the wisdom and foreknowledge of the man that not long ago predicted such a revolution would occur.

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One thought on “An Interesting Biography, an Interesting Blog, and an Interesting Lecture on ‘Ideal’ Money

  1. Reblogged this on Preston J. Byrne and commented:
    Basically, this:

    “The basic idea is simple. Instead of having a single control unit sequencing the operations of the machine in series (except for certain subsidiary operations as certain input and output functions) as is now done, the idea is to decentralize control with several different control units capable of directing various simultaneous operations and interrelating them when appropriate.”

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