Ideal Money and Its’ Relation to Bitcoin

Hayek says the only way to most efficiently utilize the economic powers of society is to have an efficient pricing system.

Only the entirety of the markets can properly price commodities for this purpose.

Money is used to invest and grow the extent and value of the market.

Ideal Money is money with a predictable (stable) supply in relation to a properly weighted ICPI (optimal basket of commodities).

Nash says Keynesian inflation targeting policy proves it is possible to affect the quality of a currency.

Since only the markets can properly price commodities, and since ideal money functions in relation to an ideal basket of commodities, then only the markets can determine optimal currency supply.

The solution is to put each currency up on a market and have the “issuers” compete on a market in which the citizens or users of the currency vote with use on the quality of the currency, which in turn effects price.

Money suppliers of each currency are forced to participate because of the introduction of a decent (but not necessarily ideal) currency bitcoin, which is naturally better than all Keynesian currencies of its’ time because it has a stable inflation rate, the cost of production is fairly predictable, and every national currency can be exchanged for it (via internet).

The result is asymptotically ideal money, because the Keynesian bankers of the respective major currencies are forced to print a money that has a closer and closer relation to their respective regions’ ICPIs.

A currency that reflects such an ICPI will be well valued and a currency that does not well reflect its regions’ ICPI will be disfavored for a better one (such as a bitcoin).

The markets naturally determine “ideal-ness” of each currency and simultaneously put pressure on the currency issuers (as if they are producers of a commodity) forcing them to solve the incredible complex problem of creating an ideal money based on supply (and monetary policy).

The solution to a cooperative game attained by reducing it to its non-cooperative parts: use market knowledge and a strong well defined universal barometer (bitcoin) to force major currencies to trend towards stability in relation to the actual value each currency represents.


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