John Nash suggests Ideal Money COULD be arranged for by linked money to a properly constructed standard of value:
…an ICPI or (international) “Industrial Consumption Price Index”. (That is thus like the U.S. CPI which controls Social Security payouts but is adapted to relate to industrial producers rather than to individuals and it is envisioned as being essentially dependent, by choice of its definition, on costs that are very global in nature, like, for example, the cost of oil from OPEC and other producers or the cost of platinum, tungsten, or nickel.)
But there is a deeper point he makes about how difficult this would be to get self interested nations, governments, banks etc. to create and adopt a fair standard of this sort:
…one cannot logically feel confident of the adoption internationally of an ideal system of currency or currencies in an achievement analogous to the achievement of the metric system or of “the euro”. Such a result would necessarily have a political content since it is the states that control and supply the various currencies that are in use at the present time.
…although that scheme for arranging for a system of money with ideal qualities would work well…it would be politically difficult to arrive at the implementation of such a system.
I myself have never understood the difficultly of understanding the evolution nash proposes to Ideal Money but I can just as easily say I don’t at all understand the complexity of international economics and how our current systems evolved or work.
I can also quite easily point out the vast majority of bitcoin enthusiasts are FAR too quick to suggest (and they nearly violently argue!) that bitcoin must be and SHOULD be a coffee money type payment mechanism.
I don’t think this is at all in-line with the proposal of Ideal Money and it doesn’t at all seem to be in-line with the most experienced or knowledgeable peoples in the bitcoin industry (including Satoshi).
Recently I think I have understood how to resolve these views, OR it might lead me to understand why bitcoin has no relation to the proposal of Ideal Money (even though it seems amazingly and obviously perfectly relateable to me).
Nash seems to clearly point out in his explicate fashion what WON’T work as a basis for Ideal Money and he also suggest what could have worked in the past:
Comparatively very recently a few countries in South America and Central America have adopted schemes that put them in positions analogous to those of Luxembourg and Liechtenstein with regard to the provisions for their domestic currency. Here Argentina and El Salvador can be mentioned. They are adopting (at least temporarily) expedients that put the value of their domestic money on a fixed relation to the U. S. dollar. And of course Panama has had such a situation for a long time previously.
This is not “ideal money” because the U. S. dollar is not an ideal standard for money value. But the countries adopting such expedients thus offer their citizens, at least for as long as they manage to or choose to continue it, a deliverance from a typical past tradition of national currencies of even less stable value than that of the (historically observed) U. S. dollar
But if, for example, all of the countries of the world would base the value for their national currencies on the value of the british currency then this situation would appear singular and unstable, while it was not so singular for a lot of countries to base their currency value on gold.
I think though, I see a disconnect in what could be the evolution of bitcoin as a standard for nations to target a system of ideal money vs the political and technological reality today.
The idea that bitcoin might someday be stable in value, for many people that see bitcoin as a coffee money, really is a logical absurdity because as bitcoin’s adoption increases these peoples expect the USD to go out of style infinitely (price!).
So from this perspective bitcoin, although in their eyes might itself evolve to become a globally accepted currency, it would seem impossible for it to become “stable”.
But I think if we think of bitcoin, in terms of units we can understand a different type of usefulness for such a standard. In terms of historical definitions of “stable-ness” we are refering to the purchasing power of the money over time, in that if 1 bitcoin buys 1 car this year, we should expect it to buy 1 car next year and subsequent years into the future.
For this bitcoin is not “stable” even for the reason that it does have an inflation schedule (although it does eventually become ideal at its asymptote!)
But in terms of creating or adopting a new type of gold standard it should be just as useful to have a “unit” that buys 1 car this year, 2 cars next year, and 3 cars the next…and so on. This isn’t “stable” in the traditional sense, but in regard to a useful standard for inflation targeting it seems to me that such PREDICTABILITY can be equally useful as all players could logically and predictably adjust to this fashion.
I think then there is the possibility of selfishly interested actors to adopt such a standard with some political evolution first that might facilitate this change.
So I guess my suggestion is that there is the possibility, if for example bitcoin was far more mature, or that if bitcoin existed back when “Bretton Woods” was being formed, that there might be the possibility that bitcoin could play a massive role in the world’s willingness and ability to create and adopt systems of Ideal Money by the definition that Nash proposes.
So it occurs to me to think that that which is not achieved by a grand action of establishment by “fiat” may alternatively tend to come into existence as a consequence of a process of evolution. And of course, after a certain degree of progress by “evolution” the rest of the progress could possibly be realized by a convention or a process of “fiat”.