Oddbean

Did empiric economical research study what happens if someone owned all the money? How much can you drain liquidity before people will not accept it at all anymore? Let‘s say, I own 100% of all Bitcoin. This would make Bitcoin worthless. But what if I owned 95% of it? Or 50%? Where‘s the tipping point when buying more Bitcoin devalues it.

Due to the nature of productive humans exchanging money, the equilibrium would be that it’s distributed… which is why a new money adoption is so radical. The de-linking of gold is impressive to me. And Satoshi’s distribution scheme and disappearance, too.

Quite the opposite, the natural tendency for any asset that's not naturally depreciating (money, property, ...) is for it too all end up in the hands of a few. The reason is that the best strategy is to always acquire and never spend. Anyone ever played the monopoly game knows this. However when people are forced to spend, like buying a house to live, the poor people are at a disadvantage. Rich people already have everything and can just time the market wait for the best moment with the lowest price. Poor people need to buy right then and there otherwise they'll sleep under a bridge. We all know that poor people e.g. buy lower quality stuff like cheap clothes, used cars etc. that are actually more expensive in the long run, just because they can't wait to accumulate enough money for the good durable things. It works like that with a shirt and it works like that with acquiring a billion dollar business. All the artificially durable assets like money and property will end up in the hands of a few, and we already today have 1% of the population owning 50% of the stuff or something like that. This is why some amount of inflation counteracts this phenomenon to some extent, an actual demurrage on money would be much better. Same with property. Silvio Gesell writes about it in his book on the Natural Economic Order. So abandon your ideas of passive income and generational wealth. They are bugs in the system. It's much more likely you'll be on the short end of that stick e.g. by starving in a financial crisis than be one of the lucky few on the receiving end.

That's a somewhat metaphorically phrased question. We're architects of our own future. We can create money that's stable and that avoids lopsided distribution. The 20% that have 80% (how Pareto worded it, in reality it's already much much worse) aren't "blessed" as if it was chance that they have their fortune. It's coded in the algorithm of the system so to speak and we can rewrite the code as we like. Silvio Gesell's ideas of demurrage are a good start, but of course he lived 100 years ago and didn't have Internet. He thought of reforming the central bank but in his world there would still be a central bank. We can do even better. The shortcomings of today's fiat system are a result of it being a quasi monopoly. The answer to any monopoly is normally markets and competition, everyone holds each other in check and quality is high and price low. Why don't we have a market of fiat currencies then. We'll hold the one's that have the best reputation for being stable. Stable issuers are rewarded by receiving demurrage fees similar to interest. This would cause an amount of computational overhead when buying and selling as a multitude of exchange rates will have to be taken account. In Gesell's time this would have been impractical, but my phone now has 100x the power of a Cray-2 supercomputer from 1986 so we're good. This all is however bad news if you don't have skills. An unskilled person, if they manage to somehow end up on the receiving end of a lopsided distribution, as unlikely as that is, could and will use their position to their advantage and just live at other's expenses. Any other arrangement like the one I'm proposing above will lead to a competition in skills. Including skills of warfare and the like. These can get very brutal very soon as Earth's resources are becoming scarce and climate change fucks things up. I think I'm fine with skills and the risk of lopsided distributions causing financial collapse and starvation outweighs everything else. Up to you.

Money owned, if it's absolutely never spent, doesn't matter. If it really just sits in a safe somewhere it's as if it doesn't exist in the first place. The amount of money in circulation matters. However with someone owning a lot there is a risk of them suddenly putting it in circulation and thus suddenly changing the amount of money in circulation. This will cause prices to fluctuate causing price instability. Up or down doesn't matter. This isn't an abstract problem btw. Fiat currently has problems that are similar. https://www.investors.com/etfs-and-funds/sectors/sp500-companies-stockpile-1-trillion-cash-investors-want-it/ This goes both ways btw, someone being owed a lot of money ("owning" a large negative sum) can suddenly demand loans to be paid back and thus suddenly withdraw a lot of money from circulation with prices again fluctuating. I believe the financial crisis in the USA in the 30's was caused that way. This is why you need demurrage on money, according to Silvio Gesell's writings. It discourages stockpiling. You'll have to abandon dreams of generational wealth and other outgrowths of capitalism but it'll keep you from starving because of a financial crisis.

This is very nicely put! My thought were about holding vs circulating as well. The historic example I thought about was Mansa Musa of the Mali empire who caused gold inflation in Egypt on his hajj. It‘s just that a some point holding or spending doesn‘t make a difference anymore. If there is a king (and only one) and he has all the gold, he cannot use it with his people.

Correct about the king holding 100% but don't worry about it because things will go South long before that. The difference between the king holding 50% and holding 95% doesn't matter, 10 times the amount of an abstract unit is still an abstract unit. It's like feet vs. meters. The change in the unit matters though. With the king accumulating gold, or Saylor accumulating Bitcoin or tech companies accumulating dollars, money is withdrawn from circulation and everyone has to recalibrate their yard stick a.k.a. prices. This causes confusion in the system and interrupts the flow of goods and services. You can literally starve with all the grain in the fields. Just ask dimwits like @semisol or @jb55 who are losing customers because of a recent recalibration of the ratio of money supply to services offered. They could have asked those questions beforehand but hey despair can be overwhelming and impact your reasoning.

> starve with all the grain in the fields I find it weird how it could come to that much specialization. So that now everybody wants to participate in the capitalist arms race where something seems to come from nothing. Everbody investing and hedging until they realize that nothing grew. But please elaborate about jb55 and Semisol. What‘s there?

jb55 and Semisol are attempting to offer services priced in Bitcoin, and also keep the price in Bitcoin stable. Further more, these services are somewhat "buy ahead", where you pay now and receive the service later, sometimes even a year later. That's fair enough, like newspapers will give you a sometimes massive discount if you subscribe for a year ahead because having that money allows them to plan ahead, it's some financial security. But recently the value of Bitcoin has been going up, and that's been creating the expectation that it'll go up even more. Nothing wrong with that either, if the economy of Bitcoin-priced services is growing against a largely constant money supply that's a fair expectation. But now you have the deflation trap. jb55's customers were happy to subscribe last month for $5 equivalent but now it's $10 equivalent and they consider dropping. Semisol would like customers to pay $50 equivalent in advance now for next year's service, but this amount of Bitcoin might be worth $100 or $500 next year, so why spend it now? Better to keep it and spend it next year and get so much more for it. Small-time Bitcoiners are typically financially stable enough from fiat income that they can afford to just buy Bitcoin and keep it the same way that they could spend it on collecting Beanie Babies to put on a shelf if they wanted to. They don't need to spend it on food or other urgent stuff. So they don't spend. You don't get an economy going like that.

> the capitalist arms race where something seems to come from nothing The bugs in our system that let some live at other people's expenses (it doesn't come from nothing, the paths are just too convoluted to identify the victims) are very appealing so everyone's pining for it. Not everyone equally though don't be mistaken. A lot of people, myself included, aren't content with "making a living" and devoting any surplus time and energy to creativity, honing skills, self-realization and the like. The aggressively capitalistic ones ("look! got me another investment property!!") are usually those that, according to their own self assessment, can't compete on talent and skill and are therefore feeling perennially insecure and desperate. This includes most Bitcoiners, who, other than Bitcoin, have nothing to talk about. The skilled people, in the other hand, will talk your ear off about their latest creation and what have you. You can usually tell the one from the other in about 30 seconds of conversation only.

About "too much specialization". Joseph Tainter has a book on the Collapse of Civilizations. It's hard to deduce, from the rubble of say the Roman Empire or Easter Island, what made them fail but his theory is that there is a recurring theme of too much specialization so you're possibly onto something there.

FYI some customer testimonials from @jb55 's and @semisol 's businesses. nostr:note13zrcuqcjzzmwa9w6f96eu4m6f0tqwgtp8erkputaqdr95rt64n4qrqzaze nostr:note1kexz0j5ksxxu3ggtpvkr92wkjs06u7r2mzzfhg2g03k765z0xz3q85ntqc

Much to the detriment of the fake news Bit-cons use to appeal to peasants, central banks cannot print money just willy nilly. In Zimbabwe maybe, not in a civilized country. There are rules there, the most important one is that "money is lent into existence" meaning freshly printed money is handed out as a loan, not a free gift. Because loans can be demanded to be paid back and as such reduce the money supply. The interest rate on those loans also limits the amount of money borrowed and as such, printed.